TIDMEQT
RNS Number : 0856J
EQTEC PLC
25 April 2022
25 April 2022
EQTEC plc
("EQTEC", the "Company" or the "Group")
Audited Results for the year ended 31 December 2021
EQTEC plc (AIM: EQT), a world-leading technology innovation
company enabling the Net Zero Future through advanced solutions for
hydrogen, biofuels, SNG and other energy production, announces its
audited results for the year ended 31 December 2021.
2021 HIGHLIGHTS:
-- Delivery of c. EUR9.2m revenue, 410% of c. EUR2.2m revenue
in previous year
-- Reduction in EBTIDA loss with an increase in net assets
-- Growth across 7 geographies
o 2 new projects led to financial close with financing
for a 3(rd) in progress
o 2 Market Development Centres under commissioning
o 3 additional plants under construction
o 12 projects under development
-- Establishment of platform for growth
o Formal legal entities in Croatia and Greece established,
with two more expected in 2022
o Advancement of strategic partnerships including collaborations
with Wood, Toyota, Logik, H2
o Recruitment of engineering and project development talent
o Successful placing raised GBP16m applied towards market,
project and capability growth
David Palumbo, CEO of EQTEC, commented: "We set ambitious
targets for 2021 and delivered more than 4x revenue over 2020,
building the momentum we intended. We converted more opportunities
than ever into focused, planned projects and amongst these was
closure of both of our targeted Market Development Centres in Italy
and Croatia. We formalised majority-owned joint ventures in Croatia
and the Aegean and invested in our go-to-market presence across
USA, UK, France, Italy and Ireland, with a view to increasing pace
and impact in those markets. Critically, we also started extending
our partnership network to major players that will credibly support
our growth into new geographies and solutions.
"I am especially proud of these achievements in the face of
strong market headwinds, including significant price increases and
delays in receiving critical raw materials or manufactured parts.
Our business platform grows increasingly resilient as we add
partners and new talent to our global network. From post-Covid
challenges to COP26 to more recent geopolitical events, we
experience more demand than ever and are taking our place as a
leading technology innovator for fossil fuel replacements and
clean, baseload energy and biofuels, as well as an innovator of new
business models for energy independence and security."
OPERATIONAL, COMMERCIAL AND CORPORATE HIGHLIGHTS:
In less than two years, EQTEC has grown both its active projects
and the pipeline of interest and opportunity behind it. In our 2020
annual report, we announced 10 projects under development or
construction, against a pipeline of 75 opportunities. In our 2021
interim results last September, we announced 17 projects under
development or construction, against a pipeline of well over
100.
Corporate development
R&D: The Company confirmed completion of a successful
R&D programme in December, including tests with Refuse Derived
Fuel (RDF) and others with contaminated plastics, all at its
R&D facility in France, operated with partner Université de
Lorraine.
Collaboration with Wood: The Company in November signed a
strategic collaboration agreement with Tier 1 engineering company
Wood, to focus on joint development of integrated technology
solutions for waste-to-SNG and waste-to-hydrogen. Company
executives joined Wood at COP26 to share its propositions and
strategy for waste-to-value business.
Collaboration with H2: The Company in December signed a
collaboration framework agreement with development consultancy H2
Energy Solutions Ltd of Germany. The partners will pursue
opportunities for deployment of waste-to-hydrogen and other
solutions, particularly in Germany and Turkey.
Appointment of CFO: The Company in July appointed Nauman Babar
as CFO and to the Board of Directors.
Appointment of joint broker: The Company in March appointed
Canaccord Genuity Limited as the Company's joint broker along with
Arden Partners.
Launch of Long-Term Incentive Plan: The Company in February
launched its first Long-Term Incentive Plan for Group employees, to
support joint ownership and drive performance through shared
accountability.
Plants under construction
USA:
The Company in October invested c. US$2.8 million (c. GBP2.1
million) in the North Fork Community Power (NFCP) project,
increasing its equity share to 49%, offering a US$4.5 million
convertible loan facility. Following execution of the facility,
construction work continued. The Company in December announced a
new partnership with Phoenix Energy, North Fork Community
Development Council and Carbonfuture GmbH to help Sierra Nevada
communities sequester carbon, reduce wildfire risk, generate green
energy, create jobs and support the local community whilst
generating tradeable carbon credits.
Italy:
The Company in May together with a consortium of investors,
acquired a decommissioned, biomass waste-to-energy plant in
Tuscany, Italy that it intends to recommission as a Market
Development Centre (MDC), with EQTEC as O&M contractor. The
plant will convert multiple types of biomass feedstock into heat,
power and biochar. Once operational, the Italia MDC is expected to
generate annual revenues of c. EUR2,000,000 and EBITDA of c.
EUR750,000.
Croatia:
The Company in August acquired, through its Croatian JV, a 1.2
MWe biomass-to-energy gasification plant in Belišće, Croatia. Once
operational, it will become a Croatia MDC, with EQTEC as O&M
contractor. Technology sales for EQTEC over the life of the project
are expected to be c. EUR2.0 million, of which c. 60% was invoiced
in Q4 2021.
In September, the Company's JV acquired a 1.2 MWe
biomass-to-energy gasification plant in Karlovaç , Croatia. The
plant will be retrofitted with EQTEC technology and repowered, and
is expected to produce 3 MWe of green electricity and high-quality
biochar. It is expected that the Company will become the plant's
O&M contractor. Technology sales for EQTEC over the life of the
project are expected to be c. EUR15m, of which c.10% was invoiced
by EQTEC in Q4 2021.
Greece:
The Company in October confirmed that all deliveries of EQTEC
technology had been made to the 0.5 MWe Larissa, Thessaly project.
The project is building Greece's first advanced gasification,
waste-to-energy plant.
Projects under development
USA:
The Company and its local partners appointed EPC contractor
Infinity Project Management Inc (IPM) as owners' representative for
the Blue Mountain Electric Company LLC opportunity in Wilseyville,
California (BMEC). The project is expected to complete front-end
engineering design (FEED) in H2 2022, toward financial close in the
same year. The BMEC plant will convert c. 24,000 tonnes of forestry
waste per year into c. 2,400 tonnes of high-quality biochar and 3
MWe of power for the local community, whilst contributing to
prevention of forest fires.
UK:
In September, the Company's Southport project SPV entered into a
conditional share purchase agreement to acquire full ownership of
the project, with the agreement expected to complete in due course.
In November, the Company submitted a revised planning application
for a Phase 1 waste reception centre and anaerobic digestion
facility as a precursor to the intended Phase 2 planning
application for an EQTEC facility. The planned Phase 1 facility is
designed to convert 80,000 tonnes of waste into six million cubic
metres of biomethane, which, in turn would output 9 MWe. The Phase
2 facility is intended to convert up to 25,000 tonnes of RDF into
an estimated 3 MWe of green electricity per year. Further, the
Company and its partner, Rotunda Group Ltd., identified the
potential for an additional gasification facility nearby. The
additional site would potentially allow for installation of a
larger, Phase 3 EQTEC facility that could transform waste into
synthetic natural gas (SNG) and/or hydrogen. The Company and its
partners are carrying out feasibility studies. EQTEC expects to be
the project developer for all phases of the project, providing
design and core Advanced Gasification Technology and retaining a
portion of the O&M contract.
The Company in February signed a Collaboration Framework
Agreement (CFA) with Logik Developments Limited, toward development
of a 9.9 MWe plant at Deeside, Flintshire, UK, including a Phase 1
recycling and anaerobic digestion facility. The Company in March
announced it had signed a CFA with Toyota Motor Manufacturing UK,
whose manufacturing facility is adjacent to the site. The CFA
expressed Toyota's intention to work with the Company on
innovative, circular and sustainable waste-to-energy solutions for
Toyota's engine manufacturing plant next to the prospective Deeside
plant. The Company in June submitted a planning application for a
Phase 2 gasification facility deploying EQTEC technology. The
proposed plant would combine a 182,000-tonne waste reception plant
with anaerobic digestion and EQTEC technology. The Company in
October announced it had through the project SPV entered into a
cooperation agreement with Anaergia Inc. for delivery of the
multi-technology plant. In December, the Company announced entering
into a Supplementary Agreement with Logik under which the two
partners would develop an additional Phase 3 waste-to-value
infrastructure on the Deeside site. The partners successfully
completed a feasibility study for hydrogen production that
indicated planning and environmental viability.
The Company in January received notification of planning
approval from Stockton-on-Tees Borough Council for an improved
waste-to-energy scheme for the Company's RDF-to-energy project at
Billingham, Teesside. In February, the Company's project signed a
conditional Land Purchase Agreement. The Company in June completed
concept design work for the core gasification process, with
progress on design of the full plant.
The Company in December confirmed it was investigating new
offtake opportunities for both Deeside and Billingham and that it
was working with technology and delivery partners toward
feasibility work at both sites. The Company in December also
confirmed its decision to defer financial close for both projects
to enable further feasibility work. Company executives visited both
sites in December and had constructive meetings with the local
Members of Parliament.
France:
The Company in December signed a Letter of Intent (LoI) with
SEPS SAS of France (SEPS), a company specialising in the management
and recycling of industrial waste. The LoI will support the
Company's pursuit of the safe and clean transformation of
contaminated plastics into energy, hydrogen and biofuels.
The Company also confirmed it had identified and was pursuing an
additional six project opportunities in France for a range of
biomass, RDF and other feedstock, as well as a range of offtake
applications.
Greece:
In January, the Company signed a MoU with Nobilis Pro Energy
S.A. The agreement includes collaborative development of Nobilis's
existing pipeline of opportunities and for construction in Nobilis,
Almyros, where grid connection and land agreement are already
confirmed.
The Company, in September, announced formation of EQTEC Synergy
Projects Limited, a JV between EQTEC and its strategic partners in
Greece, German EPC ewerGy GmbH and ECO Hellas M IKE. It also
confirmed that the JV had acquired a 1 MWe biomass-to-energy
project in Livadia, Greece and exclusivity for a second 1 MWe
project nearby.
In October, the Company's Greek JV acquired the rights to a
project in Nevrokopi, Drama. The project would develop a
biomass-to-energy plant that could generate 5 MW green electricity
from locally and sustainably sourced forestry waste.
Ireland:
The Company and its partner, Carbon Sole Group Limited, pursued
development of 3 projects in Ireland for biomass-to-bioenergy
plants and in particular for sustainable forestry waste for
production of synthetic natural gas (SNG).
FINANCIAL HIGHLIGHTS
-- Revenue: For the financial year to 31 December 2021,
the Group recognised revenue of EUR9.2 million (FY 2020:
EUR2.2 million).
-- Profit/loss: For the financial year, the Group incurred
losses of EUR4.7 million (FY 2020: EUR5.8 million).
-- Assets: The net assets of the Group increased to EUR43.4
million at 31 December 2021 (31 December 2020: EUR25.3
million).
-- Placing: The Company in May raised GBP16 million (EUR19
million) before expenses, in an institutional investor-led,
oversubscribed placing.
-- Cash: The cash balance of the Group at 31 December 2021
stood at EUR6.4 million (31 December 2020: EUR6.4 million).
-- Debt: The Company in January agreed a new loan facility
of EUR1.39 million with EQTEC shareholder, Altair Group
Investment Limited, with a maturity date of 31 December
2021. The loan, fully drawn down to repay an outstanding
debt with another lender, had a lower interest rate than
the previously held debt facility and was itself repaid
in full in June 2021, six months ahead of schedule.
POST-PERIOD HIGHLIGHTS:
-- January 2022:
The Company announced its Environmental, Social and Governance
("ESG") statement of intent. In addition to outlining a direction
of travel for coming years, the Company's ESG Statement specifies
objectives for 2022 including establishment of a baseline
assessment of greenhouse gas emissions, including carbon. As a
cleantech business, the Company intends to report on and exercise
active accountability for its ESG work.
-- February 2022:
Haverton WTV Limited ("Haverton"), a wholly-owned subsidiary of
EQTEC, and Scott Bros. Enterprises Limited reached an agreement to
extend the existing, conditional Land Purchase Agreement (the
"LPA") relating to the land on which the proposed, up to 25 MWe
Billingham EQTEC-enabled syngas plant at Haverton Hill, Billingham,
UK, will be constructed. The LPA Longstop Date was extended to 23
December 2022.
-- March 2022:
The Company formally entered the French market with the creation
of a wholly-owned subsidiary, EQTEC France SAS, and completed a
Strategic Collaboration Agreement with SEPS, a French company
specialising in the management and recycling of industrial waste.
The Agreement confirmed the shared intent to pursue development of
contaminated waste treatment plants that apply the combined
capabilities of SEPS and EQTEC technologies, with initial interest
focused on specific, offtake applications including electricity,
heat, combined cooling, heat & power (CCHP) and biofuels.
Also in March, the Company announced that it had entered into
arrangements in respect of the provision of a new unsecured
bridging loan facility for up to GBP10 million, with an initial
advance of GBP5 million received by the Company on 29 March 2022,
provided by Riverfort Global Opportunities PCC Limited and YA II
PN, Ltd.
Also in March, at the Company's Italia MDC in Italy, the thermal
cracking reactor and heat exchanger were assembled and the piping
installed. The drying and feeding system were ordered and are
expected to be on site, on time, to meet the planned commissioning
in H2 2022.
Also in March, at the Company's Belišće MDC in Croatia, a full
engineering and specification process was completed. Negotiations
advanced with a local industrial customer for power and heat
offtake. In Q2, the Company expects to agree heads of terms with
the industrial customer for the offtake. In addition, a preferred
customer for the biochar to be produced at the site has been
identified and commercial discussions commenced. A further site
visit with EPC contractor COS.M.I. Srl is confirmed for the last
week of April towards commissioning as planned in H2 2022.
OUTLOOK:
By the end of 2022, the Company expects to make fully
operational two MDCs and two additional plants under construction
for other owner-operators. It also expects to reach financial close
on additional projects that extend existing propositions but also
add new capabilities with different feedstock and new offtake
applications. The Company is targeting continued, strong revenue
growth and reduction in EBITDA losses, with planned investment in
new and innovative projects that raise EQTEC's visibility and range
of propositions.
To further position EQTEC's technology as a replacement for
fossil fuel technologies and support growth and scale, the Company
will focus on four key areas of development. First, it will invest
in its go-to-market model, formalising subsidiaries in the USA, the
UK, France and Italy, with JVs in Croatia, Greece and Ireland.
Second, it will invest in innovation, with a full R&D programme
in 2022 and a three-year strategy for technology development with
university partners as well as Wood and other, top-tier technology
businesses to be announced. Third, it will enrich its global
network to include multinational, Tier 1 development, delivery and
technology partners as well as local, market-specific partners,
including project funding partners. Fourth, it will invest in
talent in its technical and corporate centres as well as in its
go-to-market partners, to deepen and broaden capabilities with
technology innovation, project development and corporate venturing.
Finally, the Company has ramped up its engagement with policymakers
and influencers in the EU, UK and USA, toward greater awareness and
understanding of EQTEC's capabilities, propositions and place in
the Net Zero future.
The 2021 annual report and accounts will shortly be available on
the Company's website at www.eqtec.com .
Investor Presentation
EQTEC plc is pleased to announce that CEO David Palumbo, CFO
Nauman Babar and COO Jeffrey Vander Linden will provide a live
presentation based on 2021 Annual Results, via the Investor Meet
Company ("IMC") platform on 26th April 2022 at 1:00pm BST.
The presentation is open to all existing and potential
shareholders. Questions can be submitted pre-event, via the IMC
dashboard, up until 0900 UK time on the day before the meeting, or
at any time during the presentation. Investors may sign up to IMC
for free and add EQTEC plc via:
https://www.investormeetcompany.com/eqtec-plc/register-investor
. Investors who already follow EQTEC plc on the Investor Meet
Company platform will be invited automatically.
The Company will update shareholders in its Q2 update in summer
2022.
ENQUIRIES
EQTEC plc +44 203 883 7009
David Palumbo / Nauman Babar
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Strand Hanson - Nomad & Financial Adviser +44 20 7409 3494
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James Harris / James Dance
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Arden Partners - Joint Broker +44 20 7614 5900
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Paul Shackleton (Corporate) / Simon Johnson
(Sales)
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Canaccord Genuity - Joint Broker +44 20 7523 8000
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Henry Fitzgerald-O'Connor / James Asensio
/ Patrick Dolaghan
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Alma PR - Financial Media & Investor Relations +44 20 3405 0205
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Josh Royston / Sam Modlin EQTEC@almapr.co.uk
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+44 7554 014 188 / +44
BECG - General Media Enquiries 7867 452 269
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Carrie Lowe / Tom Gosschalk EQTEC@BECG.com
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About EQTEC plc
As one of the world's most experienced gasification technology
and engineering companies, with a growing track record of
delivering operational and commercial success for transforming
waste-to-energy through best-in-class technology innovation,
engineering and project development , EQTEC brings together design
innovation, project delivery discipline and solid commercial
experience to add momentum to the global energy transition. EQTEC's
proven, proprietary and patented technology is at the centre of
clean energy projects, sourcing local waste, championing local
businesses, creating local jobs and supporting the transition to
localised, decentralised and resilient energy systems.
EQTEC designs, supplies and builds advanced gasification
facilities in the UK, EU and US, with highly efficient equipment
that is modular and scalable from 1MW to 30MW. EQTEC's versatile
solutions process over 50 varieties of feedstock, including
forestry wood waste, vegetation and other agricultural waste from
farmers, industrial waste and sludge from factories and municipal
waste, all with no hazardous or toxic emissions. EQTEC's solutions
produce a pure, high-quality synthesis gas ("syngas") that can be
used for the widest range of applications, including the generation
of electricity and heat, production of synthetic natural gas
(through methanation) or biofuels (through Fischer-Tropsch,
gas-to-liquid processing) and reforming of hydrogen.
EQTEC's technology integration capabilities enable the Group to
lead collaborative ecosystems of qualified partners and to build
sustainable waste reduction and green energy infrastructure around
the world.
The Company is quoted on AIM (ticker: EQT) and the London Stock
Exchange has awarded EQTEC the Green Economy Mark, which recognises
listed companies with 50% or more of revenues from
environmental/green solutions.
Further information on the Company can be found at www.eqtec.com
.
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Chairman's Statement
2021 in review
The past year, more than any other, has reinforced my view of
EQTEC's strengths. We asked a lot of our executive directors and
the team going into 2021. I'm delighted their efforts and
leadership are reflected in an excellent performance for the
period, delivering 410% of last year's revenues, operating losses
were reduced and real progress made with projects and Market
Development Centres.
Our people and technology are our greatest strengths. We have a
talented and committed leadership team and world-leading technology
capabilities that we continue to evolve and patent. This powerful
combination enables us to produce what we believe is the world's
most versatile synthesis gas (syngas), to offer the world efficient
baseload energy and biofuels generated from waste.
As outlined by the CEO in his report, our team has successfully
built the platform for growth set out as an objective at the end of
2020 and there has been a big expansion in essential capabilities
across the business. We converted more opportunities into formal
projects, exercising more proficiency than ever in pushing projects
to financial close and hiring more professionals to guarantee more
closes in future.
Most importantly, we delivered healthy revenue growth, moved
four projects from development into construction, eight
opportunities into formally managed projects and strategically
deferred the two most complex projects in the interest of
increasing their value for customers, partners and
shareholders.
EQTEC's purpose and potential
It should come as no surprise that this business is growing. The
Company is positioned at the intersection of two essential growth
sectors: clean waste disposal and sustainable energy production.
EQTEC brings a proven, versatile technology that transforms an
exceptionally wide variety of waste types into an exceptionally
wide range of clean energy types and fuels.
The COP26 Climate Summit in November 2021 amplified the need for
our technology. The commitments made there by 190 nations to making
greenhouse gas emissions net zero by 2050 still need to be
delivered and then exceeded. Non-baseload renewables including
solar, wind and hydro all have important roles to play in
well-managed national energy strategies but these technologies will
not alone replace fossil fuels. Reliable sources of clean baseload
energy are also required.
And even after everything is done first to reduce, re-use and
recycle, waste is still an almost infinite supply as a resource.
Innovative, cleantech companies such as EQTEC will take leading
positions as providers of carbon-negative, baseload energy and
biofuels as well as reduce waste and its associated emissions.
Policymakers, in my view, are only now starting to understand the
untapped potential of syngas from waste as an alternative fuel for
baseload generation. Markets, too, are underestimating the
significant impact that cleantech innovation will have.
I joined the board of EQTEC to help the Company realise its
potential as a provider of advanced solutions that enable the Net
Zero future and I see real progress being made. We believe our
three-year strategy, with its focus on rapid growth, building
scale, and enhancing our technological capabilities, is in your
long-term interests. We will, of course, keep the strategy in
review and react to market developments that are continually and
rapidly evolving.
Outlook and closing thanks
We are living with risks to the world economy not seen for more
than a generation and there is a need to navigate our business
through a range of macroeconomic, political and environmental
challenges. I believe that the Board has a thorough understanding
of the issues and risks and has appropriate plans in place.
As I noted above, our primary challenge is not technology
capabilities nor the quality of our people - these are already the
main Company's assets. The primary challenge - even in this
turbulent market - is how to scale rapidly and keep pace with
ever-increasing demand for what it offers. The company has proven
its technology. It must move quickly to make its solutions more
readily available to more customers in more markets for greater
impact in supporting a Net Zero world.
The Company has reported in successive trading updates the
expansion of its pipeline, improving conversion and closure of
deals. I expect that in 2022 we will begin turning also to
reporting the operational performance of more live plants powered
by EQTEC technology. As Chairman of your Board of Directors, I am
conscious of my responsibilities to our shareholders who should
expect a year of strong growth as we continue to execute on our
strategy.
We at EQTEC enjoy committed, active and vocal stakeholders and I
thank you for your continued support.
Chief Executive's Report
OPENING REMARKS
2021 was a year of unprecedented change and challenge, as the
world's gradual recovery from the Covid-19 pandemic revealed
mismatches in supply and demand, with associated market
disruptions. Prices for commodities such as steel, copper and other
essential metals soared, supply chains were unable to keep up with
sudden surges in demand and global shipping and transport brought
inevitable delays. Like many, EQTEC witnessed significantly longer
order lead times, much higher production prices and pricing
guarantees measurable in days instead of months.
But even in the face of these challenges, EQTEC delivered solid
results. We reached financial close on Market Development Centres
in Italy and Croatia, moved four projects from development into
construction and eight opportunities into formally managed
projects. We delivered 410% of revenues recorded in the previous
year and reduced the operating loss by 17%. Our momentum indicates
we are on the right track for continued growth and targeting
increasingly positive, year-on-year results.
Our progress relies on a growing network of license
distributors, developers, contractors and other partners across
target geographies. At the end of 2021, we were active in seven
countries: USA, UK, France, Italy, Croatia, Greece and Ireland.
Each of these markets has its own growing pipeline of
opportunities, developed and managed by a professional team and
with a growing, local network of partners to support development,
construction and operations & maintenance (O&M).
To support our Go-to-Market entities, we focused global
partnering efforts on Tier 1, multinational technology and
Engineering, Procurement & Construction (EPC) partners. On 26
November, we announced a technology partnership with Wood, for
development and sales of waste-to-synthetic natural gas (SNG) and
waste-to-hydrogen solutions. Our joint pipeline already includes a
dozen opportunities. Additionally, we worked through much of H2
2021 with three, Tier 1 EPCs on our larger projects in the UK and
France, and expect to announce their engagement in one or more
projects in due course.
Further, we formalised joint venture (JV) arrangements in
Croatia and Greece, with a view to establishing more subsidiaries
and JVs in other target markets in 2022. These arrangements will
ensure that our standards for quality, efficiency and innovation
are applied everywhere, but also that we support successful, local
businesses to operate independently and become reliable licensing
and distribution partners for EQTEC technologies.
Finally, and in support of our broadening and deepening market
presence, we grew our global team, hiring process engineers,
control systems engineers and solidifying our relationship with
project engineering partner CT3 Ingeniería (CT3). These hires, and
the CT3 relationship, extended our core technical team and added
dozens of additional, project-critical engineers to our global
capacity. We brought in a new CFO, who is raising the bar for
strategic finance, and we added several other key roles to our
commercial and operational capabilities in support of our
Go-to-Markets.
We ended 2021 having done what we set out to do: construct our
platform for growth; strengthen our presence across geographies;
grow our pipeline of go-to-market entities and future licensors,
each with a pipeline of projects; grow our partner network and
future-proof our technology leadership.
OPERATIONAL, COMMERCIAL AND CORPORATE HIGHLIGHTS
In less than two years, EQTEC has grown both its active projects
and the pipeline of interest and opportunity behind it. In our 2020
annual report, we announced 10 projects under development or
construction, against a pipeline of 75 opportunities. In our 2021
interim results last September, we announced 17 projects under
development or construction, against a pipeline of well over
100.
Corporate development
R&D. The Company confirmed completion of a successful
R&D programme in December, including tests with Refuse Derived
Fuel (RDF) and others with contaminated plastics, all at its
R&D facility in France, operated with partner Université de
Lorraine.
Collaboration with Wood. The Company in November signed a
strategic collaboration agreement with Tier 1 engineering company
Wood, to focus on joint development of integrated technology
solutions for waste-to-SNG and waste-to-hydrogen. Company
executives joined Wood at COP26 to share its propositions and
strategy for waste-to-value business.
Collaboration with H2. The Company in December signed a
collaboration framework agreement with development consultancy H2
Energy Solutions Ltd of Germany. The partners will pursue
opportunities for deployment of waste-to-hydrogen and other
solutions, particularly in Germany and Turkey.
Appointment of CFO: The Company in July appointed Nauman Babar
as CFO and to the Board of Directors.
Appointment of joint broker: The Company in March appointed
Canaccord Genuity Limited as the Company's joint broker along with
Arden Partners.
Launch of Long-Term Incentive Plan: The Company in February
launched its first Long-Term Incentive Plan for Group employees, to
support joint ownership and drive performance through shared
accountability.
Plants under construction
USA:
The Company in October invested c. US$2.8 million (c. GBP2.1
million) in the North Fork Community Power (NFCP) project,
increasing its equity share to 49%, offering a US$4.5 million
convertible loan facility. Following execution of the facility,
construction work continued. The Company in December announced a
new partnership with Phoenix Energy, North Fork Community
Development Council and Carbonfuture GmbH to help Sierra Nevada
communities sequester carbon, reduce wildfire risk, generate green
energy, create jobs and support the local community whilst
generating tradeable carbon credits.
Italy:
The Company in May together with a consortium of investors,
acquired a decommissioned, biomass waste-to-energy plant in
Tuscany, Italy that it intends to recommission as a Market
Development Centre (MDC), with EQTEC as O&M contractor. The
plant will convert multiple types of biomass feedstock into heat,
power and biochar. Once operational, the Italia MDC is expected to
generate annual revenues of c. EUR2,000,000 and EBITDA of c.
EUR750,000.
Croatia:
The Company in August acquired, through its Croatian JV, a 1.2
MWe biomass-to-energy gasification plant in Belišće, Croatia. Once
operational, it will become a Croatia MDC, with EQTEC as O&M
contractor. Technology sales for EQTEC over the life of the project
are expected to be c. EUR2.0 million, of which c. 60% was invoiced
in Q4 2021.
In September, the Company's JV acquired a 1.2 MWe
biomass-to-energy gasification plant in Karlovaç, Croatia. The
plant will be retrofitted with EQTEC technology and repowered, and
is expected to produce 3 MWe of green electricity and high-quality
biochar. It is expected that the Company will become the plant's
O&M contractor. Technology sales for EQTEC over the life of the
project are expected to be c. EUR15m, of which c.10% was invoiced
by EQTEC in Q4 2021.
Greece:
The Company in October confirmed that all deliveries of EQTEC
technology had been made to the 0.5 MWe Larissa, Thessaly project.
The project is building Greece's first advanced gasification,
waste-to-energy plant.
Projects under development
USA:
The Company and its local partners appointed EPC contractor
Infinity Project Management Inc (IPM) as owners' representative for
the Blue Mountain Electric Company LLC opportunity in Wilseyville,
California (BMEC). The project is expected to complete front-end
engineering design (FEED) in H2 2022, toward financial close in the
same year. The BMEC plant will convert c. 24,000 tonnes of forestry
waste per year into c. 2,400 tonnes of high-quality biochar and 3
MWe of power for the local community, whilst contributing to
prevention of forest fires.
UK:
In September, the Company's Southport project SPV entered into a
conditional share purchase agreement to acquire full ownership of
the project, with the agreement expected to complete in due course.
In November, the Company submitted a revised planning application
for a Phase 1 waste reception centre and anaerobic digestion
facility as a precursor to the intended Phase 2 planning
application for an EQTEC facility. The planned Phase 1 facility is
designed to convert 80,000 tonnes of waste into six million cubic
metres of biomethane, which, in turn would output 9 MWe. The Phase
2 facility is intended to convert up to 25,000 tonnes of RDF into
an estimated 3 MWe of green electricity per year. Further, the
Company and its partner, Rotunda Group Ltd., identified the
potential for an additional gasification facility nearby. The
additional site would potentially allow for installation of a
larger, Phase 3 EQTEC facility that could transform waste into
synthetic natural gas (SNG) and/or hydrogen. The Company and its
partners are carrying out feasibility studies. EQTEC expects to be
the project developer for all phases of the project, providing
design and core Advanced Gasification Technology and retaining a
portion of the O&M contract.
The Company in February signed a Collaboration Framework
Agreement (CFA) with Logik Developments Limited, toward development
of a 9.9 MWe plant at Deeside, Flintshire, UK, including a Phase 1
recycling and anaerobic digestion facility. The Company in March
announced it had signed a CFA with Toyota Motor Manufacturing UK,
whose manufacturing facility is adjacent to the site. The CFA
expressed Toyota's intention to work with the Company on
innovative, circular and sustainable waste-to-energy solutions for
Toyota's engine manufacturing plant next to the prospective Deeside
plant. The Company in June submitted a planning application for a
Phase 2 gasification facility deploying EQTEC technology. The
proposed plant would combine a 182,000-tonne waste reception plant
with anaerobic digestion and EQTEC technology. The Company in
October announced it had through the project SPV entered into a
cooperation agreement with Anaergia Inc. for delivery of the
multi-technology plant. In December, the Company announced entering
into a Supplementary Agreement with Logik under which the two
partners would develop an additional Phase 3 waste-to-value
infrastructure on the Deeside site. The partners successfully
completed a feasibility study for hydrogen production that
indicated planning and environmental viability.
The Company in January received notification of planning
approval from Stockton-on-Tees Borough Council for an improved
waste-to-energy scheme for the Company's RDF-to-energy project at
Billingham, Teesside. In February, the Company's project signed a
conditional Land Purchase Agreement. The Company in June completed
concept design work for the core gasification process, with
progress on design of the full plant.
The Company in December confirmed it was investigating new
offtake opportunities for both Deeside and Billingham and that it
was working with technology and delivery partners toward
feasibility work at both sites. The Company in December also
confirmed its decision to defer financial close for both projects
to enable further feasibility work. Company executives visited both
sites in December and had constructive meetings with the local
Members of Parliament.
France:
The Company in December signed a Letter of Intent (LoI) with
SEPS SAS of France (SEPS), a company specialising in the management
and recycling of industrial waste. The LoI will support the
Company's pursuit of the safe and clean transformation of
contaminated plastics into energy, hydrogen and biofuels.
The Company also confirmed it had identified and was pursuing an
additional six project opportunities in France for a range of
biomass, RDF and other feedstock, as well as a range of offtake
applications.
Greece:
In January, the Company signed a MoU with Nobilis Pro Energy
S.A. The agreement includes collaborative development of Nobilis's
existing pipeline of opportunities and for construction in Nobilis,
Almyros, where grid connection and land agreement are already
confirmed.
The Company, in September, announced formation of EQTEC Synergy
Projects Limited, a JV between EQTEC and its strategic partners in
Greece, German EPC ewerGy GmbH and ECO Hellas M IKE. It also
confirmed that the JV had acquired a 1 MWe biomass-to-energy
project in Livadia, Greece and exclusivity for a second 1 MWe
project nearby.
In October, the Company's Greek JV acquired the rights to a
project in Nevrokopi, Drama. The project would develop a
biomass-to-energy plant that could generate 5 MW green electricity
from locally and sustainably sourced forestry waste.
Ireland:
The Company and its partner, Carbon Sole Group Limited, pursued
development of 3 projects in Ireland for biomass-to-bioenergy
plants and in particular for sustainable forestry waste for
production of synthetic natural gas (SNG).
FINANCIAL HIGHLIGHTS
-- Revenue: For the financial year to 31 December 2021, the
Group recognised revenue of EUR9.2 million (FY 2020: EUR2.2
million).
-- Profit/loss: For the financial year, the Group incurred
losses of EUR4.7 million (FY 2020: EUR5.8 million).
-- Assets: The net assets of the Group increased to EUR43.4
million at 31 December 2021 (31 December 2020: EUR25.3
million).
-- Placing: The Company in May raised GBP16 million (EUR19
million) before expenses, in an institutional investor-led,
oversubscribed placing.
-- Cash: The cash balance of the Group at 31 December 2021 stood
at EUR6.4 million (31 December 2020: EUR6.4 million).
-- Debt: The Company in January agreed a new loan facility of
EUR1.39 million with EQTEC shareholder, Altair Group Investment
Limited, with a maturity date of 31 December 2021. The loan, fully
drawn down to repay an outstanding debt with another lender, had a
lower interest rate than the previously held debt facility and was
itself repaid in full in June 2021, six months ahead of
schedule.
OUTLOOK AND FUTURE PLANS
The challenges of 2021 have only expanded in 2022. The tragedy
in Ukraine and sanctions against Russia have brought home to many
the critical importance of energy independence and security. We see
the recent, concerted efforts to replace Russian oil and gas as
more than a short-term reaction; it is a catalyst and accelerator
of much more fundamental, lasting change. Far greater investment
will now go into making the shift away from fossil fuels. This
presents an enormous opportunity for EQTEC.
For the world to make this shift, governments, investors and
owner-operators will turn their attention to the pervasive,
baseload energy challenge. 67% of baseload power is from
non-renewable sources that solar, wind and hydro power cannot
replace. Yet, more than 90% of investments in alternative energy
solutions have gone toward such non-baseload solutions. These
complementary solutions are also essential, but the intermittency
of their supply makes them inadequate to address baseload demand
alone.
EQTEC and other companies able to provide scalable, always-on,
24 x 7 x 365 solutions will increasingly find themselves at the
centre of attention with policymakers and investors.
EQTEC's ability to build smaller-scale, local plants that use
locally-sourced feedstock for locally distributed energy and
biofuels not only advances the Net Zero agenda, but it
revolutionises waste management, energy generation and
distribution. Our technology supports communities and industries,
in better using local, unrecyclable types of waste, transforming it
into valuable resources.. EQTEC's local-to-local approach also adds
grid resilience: one plant's downtime does not result in mass
outages but is supported by a distributed network. This approach
creates energy security and independence and transition away from
fossil fuels.
We were happy to be acknowledged in the UK Parliament for these
very points. Previous Leader of the House of Commons Jacob
Rees-Mogg commented in January 2022 that, "Companies such as EQTEC
are exactly what we need to keep us on course for net zero by 2050
while maintaining a healthy, varied and affordable energy supply."
We are finding increasing acknowledgement in the UK and elsewhere
across Europe, North America and Asia that true gasification is the
preferred intermediate fuel solution for hydrogen, synthetic
natural gas and biofuels. EQTEC is the innovation leader in
advanced gasification and we intend to engage much more closely
with governments, investors and owner-operators, embracing the
post-fossil fuel economy and the leading solutions in it.
To position EQTEC's technology as a replacement for fossil fuel
technologies and to support our growth and scale, we are doing four
key things:
First, we are investing in our Go-to-Market model. We are
formalising subsidiaries in the USA, the UK, France and Italy, with
JVs in Croatia, the Aegean and possibly elsewhere. We are looking
again to Asia, where we have long had demand and see increasing
opportunity.
Second, we are doubling-down on our investments in innovation. A
successful year of tests and trials in 2021 is expected to be
followed by another in 2022. We have a three-year strategy for
technology development and a solid plan every year. Our partners at
Université de Lorraine and Universidad de Extremadura will be
joined by Wood and other, top-tier technology businesses to be
announced.
Third, we are enriching our global network of partners. As EQTEC
pursues relationships with multinational, Tier 1 development,
delivery and technology partners, each of our Go-to-Markets is
building local partnerships. The balance of local and multinational
will bring resilience to our delivery model and support development
of a global, technology licensing network.
Fourth, we are investing in talent. 2021 saw growth in both our
technical and corporate centres with a doubling across the business
as a whole. We invested in veteran delivery managers with decades
of experience in large-scale infrastructure project management and
complex deal-making. In 2022, we are investing in corporate finance
and venturing capabilities to pursue private- and public-sector
funding. We are hiring more process engineers and engineering
project managers to cover our growing project portfolio. We are
adding financial accountants to drive discipline with forecasting
and budget management. Finally, we are investing in targeted
Go-to-Markets, including some of our partner organisations, to
ensure the quality and discipline we expect is delivered through
all projects.
By the end of 2022, we are committed to having two MDCs fully
operational and clocking the efficiency and high operational
availability we expect. The importance of these and future MDCs
cannot be overstated. Not only will these further prove EQTEC's
proposition, but they will be visitor centres for the local
community and for prospective partners and customers. They will be
training and development facilities for our partners and their
partners. They will be R&D facilities for testing capabilities
in a live environment. They will be the plants that raise EQTEC's
visibility and prove to large-scale owner-operators that we have a
highly scalable solution that will be the core of at least one of
their future lines of business.
The Net Zero future is one with minimum dependency on fossil
fuels. EQTEC and companies like us will be the ones to make that
future possible. To accelerate progress toward it, and to transform
the greatest challenge of our time into the greatest opportunity,
we are building a resourceful and resilient team, a global
ecosystem of top-tier partners and technology-led solution business
models as a platform to support exponential growth. 2022 is
expected to prove an even greater inflection point than 2021 and we
are embracing its challenges fully, to show ourselves and our
shareholders that EQTEC can fulfil our mission as a leading,
technology innovator for baseload energy and biofuels.
Consolidated statement of profit or loss
for the financial year ended 31 December 2021
Notes 2021 2020
EUR EUR
Revenue 8 9,171,764 2,234,727
Cost of sales (7,541,354) (1,978,987)
Gross profit 1,630,410 255,740
Operating income/(expenses)
Administrative expenses (4,190,592) (3,694,217)
Other income 9 - 61,922
Impairment costs 14 (5,498) (17,250)
Other losses 12 (1,418,860) (170,059)
Employee share-based compensation 10 (205,648) (1,297,309)
Foreign currency gains 348,885 211,337
Operating loss (3,841,303) (4,649,836)
Share of results from equity
accounted investments 20 (24,188) -
Gains from sales to equity
accounted investments deferred 20 (211,478) -
Gain arising from loss of
control of subsidiaries 19 9,957 -
Change in fair value of financial
investments 22 (250,378) -
Finance income 11 134,069 17,329
Finance costs 11 (517,108) (1,206,392)
Loss before taxation 14 (4,700,429) (5,838,899)
Income tax 15 - -
Loss for the financial year
f rom continuing operations (4,700,429) (5,838,899)
Profit for the financial year
from discontinued operations 32 - 71,084
LOSS FOR THE FINANCIAL YEAR (4,700,429) (5,767,815)
Loss attributable to:
Owners of the Company (4,700,497) (5,762,733)
Non-controlling interest 68 (5,082)
(4,700,429) (5,767,815)
2021 2020
EUR per share EUR per share
Basic loss per share:
From continuing operations 16 (0.001) (0.001)
From continuing and discontinued
operations 16 (0.001) (0.001)
Diluted loss per share:
From continuing operations 16 (0.001) (0.001)
From continuing and discontinued
operations 16 (0.001) (0.001)
Consolidated statement of other comprehensive income
for the financial year ended 31 December 2021
2021 2020
EUR EUR
Loss for the financial year (4,700,429) (5,767,815)
Other comprehensive income
Items that may be reclassified
subsequently to profit or loss
Exchange differences arising on
retranslation
of foreign operations 238,715 6,080
Other comprehensive income for the
year 238,715 6,080
Total comprehensive loss for the
financial year (4,461,714) (5,761,735)
Attributable to:
Owners of the company (4,301,511) (5,848,045)
Non-controlling interests (160,203) 86,310
(4,461,714) (5,761,735)
Consolidated statement of financial position
At 31 December 2021
Notes 2021 2020
ASSETS EUR EUR
Non-current assets
Property, plant and equipment 17 446,861 187,792
Intangible assets 18 17,702,833 15,283,459
Investments accounted for
using the equity method 20 8,074,184 3,379,625
Financial assets 21 4,050,030 2,570,888
Other financial investments 22 506,976 -
Total non-current assets 30,780,884 21,421,764
Current assets
Development assets 24 3,455,496 503,653
Loan receivable from project
development undertakings 24 3,000,469 482,537
Trade and other receivables 25 6,876,747 894,531
Cash and cash equivalents 26 6,446,217 6,394,791
19,778,929 8,275,512
Assets included in disposal 32 - -
group classified as held for
resale
Total current assets 19,778,929 8,275,512
Total assets 50,559,813 29,697,276
Consolidated statement of financial position
At 31 December 2021 - continued
Notes 2021 2020
EQUITY AND LIABILITIES EUR EUR
Equity
Share capital 27 25,977,130 24,355,545
Share premium 27 83,610,562 62,896,521
Other reserves 2,353,868 2,148,220
Accumulated deficit (66,177,072) (61,875,561)
Equity attributable to the owners
of the company 45,764,488 27,524,725
Non-controlling interests 28 (2,384,189) (2,223,986)
Total equity 43,380,299 25,300,739
Non-current liabilities
Lease liabilities 30 56,855 106,465
Total non-current liabilities 56,855 106,465
Current liabilities
Trade and other payables 31 6,921,806 3,183,979
Borrowings 29 - 1,020,851
Lease liabilities 30 200,853 85,242
7,122,659 4,290,072
Liabilities included in disposal 32 - -
group classified as held for
resale
Total current liabilities 7,122,659 4,290,072
Total equity and liabilities 50,559,813 29,697,276
The financial statements were approved by the Board of Directors
on 22 April 2022 and signed on its behalf by:
Ian Pearson David Palumbo
Chairman Director
Consolidated statement of changes in equity
for the financial year ended 31 December 2021
Share Other Accumulated Equity Non-controlling
Capital Share reserves deficit attributable interests Total
premium to owners
of the
company
EUR EUR EUR EUR EUR EUR EUR
Balance at 1
January 2020 21,317,482 52,487,278 - (56,011,538) 17,793,222 (2,326,274) 15,466,948
Issue of ordinary
shares in EQTEC
plc (Note 27) 2,658,622 9,841,484 - - 12,500,106 - 12,500,106
Conversion of
debt into equity
(Notes 27) 379,441 1,536,252 - - 1,915,693 - 1,915,693
Share issue costs
(Note 27) - (639,931) - - (639,931) - (639,931)
Employee
share-based
compensation
(Notes 10 & 27) - - 1,297,309 - 1,297,309 - 1,297,309
Recognition of
equity element
of debt (Notes
12 & 27) - - 522,349 - 522,349 - 522,349
Warrants issued
on placing of
shares - (328,562) 328,562 - - - -
Change in the
ownership
interest - - - (15,978) (15,978) 15,978 -
Transactions
with owners 3,038,063 10,409,243 2,148,220 (15,978) 15,579,548 15,978 15,595,526
Loss for the
financial year - - - (5,762,733) (5,762,733) (5,082) (5,767,815)
Unrealised
foreign
exchange losses - - - (85,312) (85,312) 91,392 6,080
Total
comprehensive
loss for the
financial year - - - (5,848,045) (5,848,045) 86,310 (5,761,735)
Balance at 31
December 2020 24,355,545 62,896,521 2,148,220 (61,875,561) 27,524,725 (2,223,986) 25,300,739
Issue of ordinary
shares in EQTEC
plc (Note 27) 1,402.324 18,206,268 - - 19,608,592 - 19,608,592
Conversion of
debt into equity
(Note 27) 167,728 3,285,013 - - 3,452,741 - 3,452,741
Issued in
acquisition
of financial
asset (Note 27) 51,533 693,628 - - 745,161 - 745,161
Share issue costs
(Note 27) - (1,470,868) - - (1,470,868) - (1,470,868)
Employee
share-based
compensation
(Note 10) - - 205,648 - 205,648 - 205,648
Transactions
with owners 1,621,585 20,714,041 205,648 - 22,541,274 - 22,541,274
Loss for the
financial year - - - (4,700,497) (4,700,497) 68 (4,700,429)
Unrealised
foreign
exchange losses - - - 398,986 398,986 (160,271) 238,715
Total
comprehensive
loss for the
financial year - - - (4,301,511) (4,301,511) (160,203) (4,461,714)
Balance at 31
December 2021 25,977,130 83,610,562 2,353,868 (66,177,072) 45,764,488 (2,384,189) 43,380,299
Consolidated statement of cash flows
for the financial year ended 31 December 2021
Notes 2021 2020
EUR EUR
Cash flows from operating
activities
Loss for the financial year (4,700,429) (5,838,899)
Adjustments for:
Depreciation of property,
plant and equipment 17 156,520 83,463
Amortisation of intangible
assets 18 72,685
Loss on disposal of investments - 1,275
Impairment of other financial
investments 22 - 17,250
Employee share-based compensation 10 205,648 1,297,309
Impairment of trade receivables 25 - 19,016
Share of loss of equity accounted 24,188 -
investments
Gains from sales to equity 211,478 -
accounted investments deferred
Gain on loss of control of
subsidiary 19 (9,957) -
Change in fair value of financial
investments 22 250,378 -
Loss on debt for equity swap 12 1,418,860 170,059
Unrealised foreign exchange
movements 103,234 (201,723)
Operating cash flows before
working capital changes (2,267,395) (4,452,250)
Decrease/(increase) in:
Development assets (3,144,600) (503,653)
Trade and other receivables (5,946,010) 6,754
Increase in Trade and other
payables 3,432,256 264,141
Cash used in operating activities
- continuing operations (7,925,749) (4,685,008)
Finance income 11 (134,069) (17,329)
Finance costs 11 517,108 1,206,392
Net cash used in operating
activities - continuing operations (7,542,710) (3,495,945)
Net cash used in operating
activities - discontinued
operations 32 - (47,741)
Cash used in operating activities (7,542,710) (3,543,686)
Cash flows from investing
activities
Additions to intangible assets (1,000,000) -
Proceeds from the disposal
of property, plant and equipment - 300,000
Cash inflow from disposal
of subsidiary 33 - 218,635
Selling expenses on disposal
of subsidiary 33 - (65,261)
Loans advanced to project
development undertakings (2,430,137) (469,769)
Proceeds from the disposal
of other investments - 84
Investment in equity accounted
undertakings (978,825) (1,150,619)
Loans advanced to equity accounted (3,746,984) -
undertakings
Investment in related undertakings (697,635) (333,882)
Other advances to equity accounted (27,508) -
undertakings
Net cash used in investing
activities - continuing operations (8,881,089) (1,500,812)
Net cash used in investing
activities - discontinued
operations 32 - (19,997)
Net cash used in investing
activities (8,881,089) (1,520,809)
Consolidated statement of cash flows
for the financial year ended 31 December 2021 - continued
Notes 2021 2020
EUR EUR
Cash flows from financing activities
Proceeds from borrowings and
lease liabilities 29 1,391,174 107,000
Repayment of borrowings and
lease liabilities 29 (3,031,724) (1,363,348)
Loan issue costs 29 - (30,944)
Proceeds from issue of ordinary
shares 19,420,222 12,735,236
Share issue costs (1,180,217) (635,911)
Interest paid (20) (21,955)
Net cash generated from financing
activities - continuing operations 16,599,435 10,790,078
Net cash used in financing activities
- discontinued operations 32 - (63,196)
Net cash generated from financing
activities 16,599,435 10,726,882
Net increase in cash and cash
equivalents 175,636 5,662,387
Cash and cash equivalents at
the beginning of the financial
period 6,270,581 608,194
Cash and cash equivalents at
the end of the financial period 26 6,446,217 6,270,581
Cash and cash equivalents included 32 - -
in disposal group
Cash and cash equivalents for
continuing operations 26 6,446,217 6,270,581
Details of non-cash transactions are set out in Note 36 of the
financial statements.
Company statement of financial position
At 31 December 2021
Notes 2021 2020
ASSETS EUR EUR
Non-current assets
Intangible assets 18 2,419,374 -
Investment in subsidiary
undertakings 19 17,994,504 17,869,630
Investments accounted
for using the equity method 20 6,569,432 3,379,625
Other financial investments 22 506,976 -
Total non-current assets 27,490,286 21,249,255
Current assets
Development assets 24 305,553 9,275
Loan receivable from project
development undertakings 24 613,678 243,598
Trade and other receivables 25 14,507,848 2,703,491
Cash and bank balances 26 4,845,633 6,111,864
Total current assets 20,272,712 9,068,228
Total assets 47,762,998 30,317,483
EQUITY AND LIABILITIES
Equity
Share capital 27 25,977,130 24,355,545
Share premium 27 102,544,642 81,830,601
Other reserves 2,353,868 2,148,220
Accumulated deficit (83,603,698) (79,661,097)
Total equity 47,271,942 28,673,269
Total non-current liabilities - -
Current liabilities
Borrowings 29 - 896,641
Trade and other payables 31 491,056 747,573
Total current liabilities 491,056 1,644,214
Total equity and liabilities 47,762,998 30,317,483
The Group is availing of the exemption in Section 304 of the
Companies Act 2014 from filing its Company Statement of
Comprehensive Income. The loss for the financial year incurred by
the Company was EUR3,942,601 (2020: EUR3,270,895).
The financial statements were approved by the Board of Directors
on 22 April 2022 and signed on its behalf by:
Ian Pearson David Palumbo
Chairman Director
Company statement of changes in equity
for the financial year ended 31 December 2021
Share Other Accumulated
capital Share premium reserves deficit Total
EUR EUR EUR EUR EUR
Balance at 1
January
2020 21,317,482 71,421,358 - (76,390,202) 16,348,638
Issue of
ordinary
shares in
EQTEC plc
(Note 27) 2,658,622 9,841,484 - - 12,500,106
Conversion of
debt
into equity
(Notes
27 and 29) 379,441 1,536,252 - - 1,915,693
Share issue
costs
(Note 27) - (639,931) - - (639,931)
Employee
share-based
compensation
(Notes
10 and 27) - - 1,297,309 - 1,297,309
Recognition of
equity
element of
debt (Notes
12 and 27) - - 522,349 - 522,349
Warrants issued
on
placing of
shares
(Note 27) - (328,562) 328,562 - -
Transactions
with
owners 3,038,063 10,409,243 2,148,220 - 15,595,526
Loss for the
financial
year (Note 37) - - - (3,270,895) (3,270,895)
Total
comprehensive
loss for the
financial
year - - - (3,270,895) (3,270,895)
Balance at 31
December
2020 24,355,545 81,830,601 2,148,220 (79,661,097) 28,673,269
Issue of
ordinary
shares in
EQTEC plc
(Note 27) 1,402.324 18,206,268 - - 19,608,592
Conversion of
debt
into equity
(Note
27) 167,728 3,285,013 - - 3,452,741
Issued in
acquisition
of financial
asset
(Note 27) 51,533 693,628 - - 745,161
Share issue
costs
(Note 27) - (1,470,868) - - (1,470,868)
Employee
share-based
compensation
(Note
10) - - 205,648 - 205,648
Transactions
with
owners 1,621,585 20,714,041 205,648 - 22,541,274
Loss for the
financial
year - - - (3,942,601) (3,942,601)
Total
comprehensive
loss for the
financial
year - - - (3,942,601) (3,942,601)
Balance at 31
December
2021 25,977,130 102,544,642 2,353,868 (83,603,698) 47,271,942
Company statement of cash flows
for the financial year ended 31 December 2021
Notes 2021 2020
EUR EUR
Cash flows from operating activities
Loss before taxation (3,942,601) (3,270,895)
Adjustments for:
Amortisation of intangible assets 18 72,685 -
Employee share-based compensation 10 80,771 1,297,309
Reversal of impairment of intercompany
loans - (1,720,704)
Finance costs 508,747 1,177,335
Finance income (104,568) (13,397)
Impairment of intercompany balances 5,627 140,678
Change in fair value of financial
investments 22 250,378 -
Loss on debt for equity swap 10 1,418,860 170,059
Foreign currency (gains)/losses
arising from retranslation of
borrowings (280,767) 235,968
Operating cash flows before working
capital changes (1,990,868) (1,983,647)
Funds advanced to inter-company
accounts (13,490,118) (2,112,285)
Repayment of inter-company balances 2,205,863 689,637
Increase in development assets (296,278) (9,275)
Increase in trade and other receivables (283,968) (107,773)
Increase in trade and other payables 178,869 352,350
Net cash used in operating activities (13,676,500) (3,170,993)
Cash flows from investing activities
Addition to intangible assets (1,000,000) -
Investment in equity accounted
undertakings (968,324) (1,150,619)
Loans advanced to equity accounted (2,036,074) -
undertakings
Investment in subsidiary (10,000) (1,000,000)
Subsidiaries transferred to other 10,003 -
subsidiary undertakings
Loans advanced to project development
undertakings (350,000) (230,957)
Net cash used in investing activities (4,354,395) (2,381,576)
Cash flows from financing activities
Proceeds from borrowings 29 1,391,174 -
Repayment of borrowings 29 (2,866,515) (852,567)
Proceeds from issue of ordinary
shares 19,420,222 12,735,236
Share issue costs (1,180,217) (635,911)
Loan issue costs 29 - (30,944)
Net cash generated from financing
activities 16,764,664 11,215,814
Net (decrease)/increase in cash
and cash equivalents (1,266,231) 5,663,245
Cash and cash equivalents at
the beginning of the financial
year 6,111,864 448,619
Cash and cash equivalents at
the end of the financial year 26 4,845,633 6,111,864
Notes to the financial statements
1. GENERAL INFORMATION
EQTEC plc ("the Company") is a company domiciled in Ireland.
These financial statements for the financial year ended 31 December
2021 consolidate the individual financial statements of the Company
and its subsidiaries (together referred to as 'the Group').
The Group is a waste-to-value group, which uses its proven
proprietary Advanced Gasification Technology to generate safe,
green energy from over 50 different kinds of feedstock such as
municipal, agricultural and industrial waste, biomass, and
plastics. The Group collaborates with waste operators, developers,
technologists, EPC contractors and capital providers to build
sustainable waste elimination and green energy infrastructure.
Our income currently comes from the following streams:
gasification technology sales including software, engineering &
design and other related services; maintenance income from
operating plants; and we receive development fees from projects
where we invest development capital. In the future we expect to
receive potential revenue from licensing opportunities and revenue
from live operations where EQTEC has an equity stake in a
plant.
2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs)
New/revised standards and interpretations adopted in 2021
In the current financial year, the Group has applied a number of
amendments to IFRS Standards and Interpretations issued by the
International Accounting Standards Board (IASB), as adopted by the
European Union, that are effective for an annual period that begins
on or after 1 January 2021. Their adoption has not had any impact
on the disclosures or on the amounts reported in these financial
statements.
-- Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16:
Interest Rate Benchmark Reform Phase 2;
-- Amendments to IFRS 16: COVID-19 Rent Related Concessions.
New and revised IFRS Standards in issue but not yet
effective
The following new and revised Standards and Interpretations have
not been adopted by the Group, whether endorsed by the European
Union or not. The Group is currently analysing the practical
consequences of the new Standards and the effects of applying them
to the financial statements. The related standards and
interpretations are:
-- IFRS 17 Insurance Contracts and Amendments to IFRS
17 Insurance Contracts (Amendments to IFRS 17 and
IFRS 4);
-- IFRS 10 and IAS 28 (amendments) Sale of Contribution
of Assets between an Investor and its Associate
or Joint Venture;
-- Amendments to IAS 1 Classification of Liabilities
as Current or Non-current;
-- Amendments to IFRS 3 Reference to the Conceptual
Framework;
-- Amendments to IAS 16 Property, Plant and Equipment-Proceeds
before Intended Use;
-- Amendments to IAS 37 Onerous Contracts - Cost of
Fulfilling a Contract;
-- Annual improvements to IFRS Standards 2018-2020
cycle Amendments to IFRS 1 First time adoption of
International Financial Reporting Standards, IFRS
9 Financial Instruments, IFRS 16 Leases and IAS
41 Agriculture;
-- Amendments to IAS 1 and IFRS Practice Statement
2 Disclosure of Accounting Policies;
-- Amendments to IAS 8 Definition of Accounting Estimates;
-- Amendments to IAS 12 Deferred Tax related to Assets
and Liabilities arising from a Single Transaction.
The directors do not expect that the adoption of the Standards
listed above will have a material impact on the financial
statements of the Group in future periods.
3. STATEMENT OF ACCOUNTING POLICIES
Statement of Compliance, Basis of Preparation and Going
Concern
The Group's consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards
(IFRS) as adopted by the European Union ('EU') and effective at 31
December 2021 for all years presented as issued by the
International Accounting Standards Board.
The financial statements of the parent company, EQTEC plc have
been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union ('EU') effective
at 31 December 2021 for all years presented as issued by the
International Accounting Standards Board and Irish Statute
comprising the Companies Act 2014.
The consolidated financial statements are prepared under the
historical cost convention except for certain financial assets and
financial liabilities which are measured at fair value. The
principal accounting policies set out below have been applied
consistently by the parent company and by all of the Company's
subsidiaries to all years presented in these consolidated financial
statements.
Comparative amounts have been re-presented where necessary, to
present the financial statements on a consistent basis.
The financial statements are presented in euros and all values
are not rounded, except when otherwise indicated.
The Group incurred a loss of EUR4,700,429 (2020: EUR5,767,815)
during the financial year ended 31 December 2021 and had net
current assets of EUR12,656,270 (2020: EUR3,985,440) and net assets
of EUR43,380,299 (2020: EUR25,300,739) at 31 December 2021.
The financial statements have been prepared on a going concern
basis. The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Chairman's Statement and Chief Executive's
Report. The principal risks and uncertainties are set out in the
Directors' Report.
Management have produced forecasts for the period up to April
2023 taking account of reasonably plausible changes in trading
performance and market conditions, which have been reviewed by the
Directors. These reasonably plausible changes include the continued
impact of the Covid-19 pandemic and any related operational and
execution delays caused by it. The forecasts demonstrate that the
Group and Company is forecast to generate cash in 2022/2023 and
that the Group has sufficient cash reserves to enable the Group and
Company to meet its obligations as they fall due for a period of at
least 12 months from the date when these financial statements have
been signed. Amongst other things, the assessment involved
assumptions around collection of receivables from associate and
joint venture companies and availability of project funding.
After undertaking the assessments and considering the
uncertainties set out above, the Directors have a reasonable
expectation that the Group and Company has adequate resources to
continue to operate for the foreseeable future and for these
reasons they continue to adopt the going concern basis in preparing
the financial statements.
Basis of consolidation
The Group financial statements consolidate those of the parent
company and all of its subsidiaries as of 31 December 2021. All
subsidiaries have a reporting date of 31 December.
All transactions and balances between Group companies are
eliminated on consolidation, including unrealised gains and losses
on transactions between Group companies. Where unrealised losses on
intra-group asset sales are reversed on consolidation, the
underlying asset is also tested for impairment from a Group
perspective. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries
acquired or disposed of during the financial year are recognised
from the effective date of acquisition, or up to the effective date
of disposal, as applicable. The Group attributes total
comprehensive income or loss of subsidiaries between the owners of
the parent and the non-controlling interests based on their
respective ownership interests.
A change in the ownership interest of a subsidiary, without a
loss of control, is accounted for as an equity transaction. The
carrying amount of the Group's interests and the non-controlling
interests are adjusted to reflect the changes in their relative
interests in the subsidiaries. Any difference between the amount by
which the noncontrolling interests are adjusted and the fair value
of the consideration paid or received is recognised directly in
equity and attributed to the owners of the Company.
When the Group loses control of a subsidiary, the gain or loss
on disposal recognised in profit or loss is calculated as the
difference between (i) the aggregate of the fair value of the
consideration received and the fair value of any retained interest
and (ii) the previous carrying amount of the assets (including
goodwill), less liabilities of the subsidiary and any
non-controlling interests. All amounts previously recognised in
other comprehensive income in relation to that subsidiary are
accounted for as if the Group had directly disposed of the related
assets or liabilities of the subsidiary (i.e. reclassified to
profit or loss or transferred to another category of equity as
required/permitted by applicable IFRS Standards). The fair value of
any investment retained in the former subsidiary at the date when
control is lost is regarded as the fair value on initial
recognition for subsequent accounting under IFRS 9 when applicable,
or the cost on initial recognition of an investment in an associate
or a joint venture.
Business combinations
The Group applies the acquisition method in accounting for
business combinations. The consideration transferred by the Group
to obtain control of a subsidiary is calculated as the sum of the
acquisition-date fair values of assets transferred, liabilities
incurred, and the equity interests issued by the Group, which
includes the fair value of any asset or liability arising from a
contingent consideration arrangement. Acquisition costs are
expensed as incurred. Assets acquired and liabilities assumed are
generally measured at their acquisition-date fair values.
Step Acquisitions
Business combination achieved in stages is accounted for using
acquisition method at acquisition date. The components of a
business combination, including previously held investments are
remeasured at fair value at acquisition date and a gain or loss is
recognised in the consolidated statement of profit or loss.
Profit or loss from discontinued operations
A discontinued operation is a component of the Group that either
has been disposed of or is classified as held for sale. Profit or
loss from discontinued operations comprises the post-tax profit or
loss of discontinued operations and the post-tax gain or loss
resulting from the measurement and disposal of assets classified as
held for sale (see also policy on non-current assets and
liabilities classified as held for sale and discontinued operations
below and Note 32).
Investments in associates and joint ventures
Investments in associates and joint ventures are accounted for
using the equity method. The carrying amount of the investment in
associates and joint ventures is increased or decreased to
recognise the Group's share of the profit or loss and other
comprehensive income of the associate and joint venture, adjusted
where necessary to ensure consistency with the accounting policies
of the Group. When the Group's share of losses on an associate or a
joint venture exceeds the Group's interest in that associate or
joint venture (which includes any long-term interests that, in
substance, form part of the Group's net investment in the associate
or joint venture), the Group discontinues recognising its share of
future losses. Additional losses are recognised only to the extent
that the Group has incurred legal or constructive obligations or
made payments on behalf of the associate or joint venture.
Unrealised gains and losses on transactions between the Group
and its associates and joint ventures are eliminated to the extent
of the Group's interest in those entities. Where unrealised losses
are eliminated, the underlying asset is also tested for
impairment.
Investments in related undertaking
Advances paid to acquire investee shares are recognised at cost
and will be reclassified to either to investments in associates and
joint ventures or investments in subsidiaries, as applicable.
Investments in subsidiaries
Investments in subsidiaries in the Company's statement of
financial position are measured at cost less accumulated
impairment. When necessary, the entire carrying amount of the
investment is tested for impairment by comparing its recoverable
amount (higher of value in use and fair value less costs to sell)
with its carrying amount, any impairment loss recognised forms part
of the carrying amount of the investment. Any reversal of that
impairment loss is recognised to the extent that the recoverable
amount of the investment subsequently increases.
Foreign currency translation
Functional and presentation currency
The consolidated financial statements are presented in Euro,
which is also the functional and presentation currency of the
parent company. The Group has subsidiaries in the United Kingdom,
whose functional currency is the GBP GBP.
Foreign currency transactions and balances
Foreign currency transactions are translated into the functional
currency of the respective Group entity, using the exchange rates
prevailing at the dates of the transactions (spot exchange rate).
Foreign exchange gains and losses resulting from the settlement of
such transactions and from the remeasurement of monetary items
denominated in foreign currency at year-end exchange rates are
recognised in consolidated statement of profit or loss.
Non-monetary items are not retranslated at year-end and are
measured at historical cost (translated using the exchange rates at
the transaction date), except for non-monetary items measured at
fair value which are translated using the exchange rates at the
date when fair value was determined.
Foreign operations
In the Group's financial statements, all assets, liabilities and
transactions of Group entities with a functional currency other
than Euro are translated into Euro upon consolidation. The
functional currency of the entities in the Group has remained
unchanged during the reporting financial year.
On consolidation, assets and liabilities have been translated
into Euro at the closing rate at the reporting date. Goodwill and
fair value adjustments arising on the acquisition of a foreign
entity have been treated as assets and liabilities of the foreign
entity and translated into Euro at the closing rate. Income and
expenses have been translated into Euro at the average rate over
the reporting financial year. Exchange differences are charged or
credited to consolidated statements of other comprehensive income
and recognised in the accumulated deficit reserve in equity. On
disposal of a foreign operation, the related cumulative translation
differences recognised in equity are reclassified to profit or loss
and are recognised as part of the gain or loss on disposal. To the
extent that foreign subsidiaries are not under the full control of
the parent company, the relevant share of currency differences is
allocated to the non-controlling interests.
Segment reporting
The Group has two operating segments: the power generation
segment and the technology sales segment. In identifying these
operating segments, management generally follows the Group's
service lines representing its main products and services.
Each operating segment is managed separately as each requires
different technologies, marketing approaches and other resources.
All inter-segment transfers are carried out at arm's length prices
based on prices charged to unrelated customers in standalone sales
of identical goods or services.
For management purposes, the Group uses the same measurement
policies as those used in its financial statements. In addition,
corporate assets which are not directly attributable to the
business activities of any operating segment are not allocated to a
segment. This primarily applies to the Group's central
administration costs and directors' salaries.
Revenue
Revenue arises from the rendering of services. Revenue is
measured based on the consideration to which the Group expects to
be entitled in a contract with a customer and excludes amounts
collected on behalf of third parties. The Group recognises revenue
when it transfers control of a product or service to a customer. To
determine whether to recognise revenue, the Group follows a 5-step
process:
1. Identifying the contract with a customer;
2. Identifying the performance obligations;
3. Determining the transaction price;
4. Allocating the transaction price to the performance obligations; and
5. Recognising revenue when/as performance obligation(s) are satisfied.
The Group applies the revenue recognition criteria set out below
to each separately identifiable component of the sales transaction.
The consideration received from these multiple-component
transactions is allocated to each separately identifiable component
in proportion to its relative fair value. Revenue is recognised
either at a point in time or over time, when the Group satisfies
performance obligations by transferring the promised goods or
services to its customers.
Rendering of services
The Group generates revenues from after-sales service and
maintenance, consulting, and construction contracts for renewable
energy systems. Consideration received for these services is
initially deferred, included in other payables, and is recognised
as revenue in the financial year when the performance obligation is
satisfied. In recognising after-sales service and maintenance
revenues, the Group determines the stage of completion by
considering both the nature and timing of the services provided and
its customer's pattern of consumption of those services, based on
historical experience. Where the promised services are
characterised by an indeterminate number of acts over a specified
year of time, revenue is recognised over time.
Revenue from consulting services is recognised when the services
are provided by reference to the contract's stage of completion at
the reporting date in the same way as construction contracts for
renewable energy systems described below.
Construction contracts for renewable energy systems
Construction contracts for renewable energy systems specify a
fixed price for the design, development and installation of biomass
systems. When the outcome can be assessed reliably, contract
revenue and associated costs are recognised by reference to the
stage of completion of the contract activity at the reporting date.
Contract revenue is measured at the fair value of consideration
received or receivable and recognised over time on a cost-to-cost
method. When the Group cannot measure the outcome of a contract
reliably, revenue is recognised only to the extent of contract
costs that have been incurred and are recoverable. Contract costs
are recognised in the financial year in which they are incurred. In
either situation, when it is probable that total contract costs
will exceed total contract revenue, the expected loss is recognised
immediately in consolidated statement of profit or loss.
A construction contract's stage of completion is assessed by
management by comparing costs incurred to date with the total costs
estimated for the contract (a procedure sometimes referred to as
the cost-to-cost method). Only those costs that reflect work
performed are included in costs incurred to date. The gross amount
due from customers for contract work is presented within trade and
other receivables for all contracts in progress for which costs
incurred plus recognised profits (less recognised losses) exceeds
progress billings. The gross amount due to customers for contract
work is presented within other liabilities for all contracts in
progress for which progress billings exceed costs incurred plus
recognised profits (less recognised losses).
Interest and dividends
Interest income and expenses are reported on an accrual basis
using the effective interest method. Dividends, other than those
from investments in associates and joint ventures, are recognised
at the time the right to receive payment is established.
Operating expenses
Operating expenses are recognised in consolidated statement of
profit or loss upon utilisation of the service or as incurred.
Expenditure for warranties is recognised when the Group incurs an
obligation, which is typically when the related goods are sold.
Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for
their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their
intended use or sale. All other borrowing costs are recognised in
profit or loss in the period in which they are incurred.
Goodwill
Goodwill represents the future economic benefits arising from a
business combination that are not individually identified and
separately recognised. Goodwill is carried at cost less accumulated
impairment losses. Goodwill is not amortised but is reviewed for
impairment at least annually. Refer below for a description of
impairment testing procedures.
Non-controlling interests
Non-controlling interests that are present ownership interest
and entitle their holders to a proportionate share of the entity's
net assets in the event of a liquidation may be initially measured
either at fair value of at the non-controlling interests'
proportionate share of the recognised amounts of the acquiree's
identifiable net assets. Other types of non-controlling interests
are measured at fair value, or, when applicable, on the basis
specified in another IFRS.
Property, plant and equipment
Property, plant and equipment are initially recognised at
acquisition cost or manufacturing cost, including any costs
directly attributable to bringing the assets to the location and
condition necessary for them to be capable of operating in the
manner intended by the Group's management. Property, plant and
equipment, are subsequently measured at cost less accumulated
depreciation and impairment losses. Depreciation is recognised on a
straight-line basis to write down the cost less estimated residual
value of leasehold buildings. The following useful lives are
applied:
-- Leasehold buildings: 5-50 years
-- Office equipment: 2-5 years
Material residual value estimates and estimates of useful life
are updated as required, but at least annually. Gains or losses
arising on the disposal of leasehold buildings are determined as
the difference between the disposal proceeds and the carrying
amount of the assets and are recognised in profit or loss within
other income or other expenses.
Construction in progress is stated at cost less any accumulated
impairment loss. Cost comprises direct costs of construction as
well as interest expense and exchange differences capitalised
during the year of construction and installation. Capitalisation of
these costs ceases and the asset in course of construction is
transferred to fixed assets when substantially all the activities
necessary to prepare the assets for their intended use are
completed. No depreciation is provided in respect of payments on
account and asset in course of construction until it is fully
completed and ready for its intended use. Construction in progress
is derecognised upon disposal or when the asset is permanently
withdrawn from use and no future economic benefits are expected
from the disposal. Any gain or loss arising on derecognition of the
construction in progress (calculated as the difference between the
net disposal proceeds and the carrying amount of the asset) is
included in profit or loss in the period in which the asset is
derecognised.
Leased assets
The Group as a lessee
The Group makes the use of leasing arrangements principally for
the provision of the main office space. The rental contract for
offices are typically negotiated for terms of between 3 and 10
years and some of these have extension terms. The Group does not
enter into sale and leaseback arrangements. All the leases are
negotiated on an individual basis and contain a wide variety of
different terms and conditions such as purchase options and
escalation clauses.
The Group assesses whether a contract is or contains a lease at
inception of the contract. A lease conveys the right to direct the
use and obtain substantially all of the economic benefits of an
identified asset for a period of time in exchange for
consideration. Some lease contracts contain both lease and
non-lease components. The Group has elected to not separate its
leases for offices into lease and non-lease components and instead
accounts for these contracts as a single lease component.
Measurement and recognition of leases
At lease commencement date, the Group recognises a right-of-use
asset and a lease liability on the consolidated statement of
financial position. The right-of-use asset is measured at cost,
which is made up of the initial measurement of the lease liability,
any initial direct costs incurred by the Group, an estimate of any
costs to dismantle and remove the asset at the end of the lease,
and any lease payments made in advance of the lease commencement
date (net of any incentives received).
The Group depreciates the right-of-use assets on a straight-line
basis from the lease commencement date to the earlier of the end of
the useful life of the right-of-use asset or the end of the lease
term. The Group also assesses the right-of-use asset for impairment
when such indicators exist.
Measurement and recognition of leases - continued
At the commencement date, the Group measures the lease liability
at the present value of the lease payments unpaid at that date,
discounted using the Group's incremental borrowing rate because as
the lease contracts are negotiated with third parties it is not
possible to determine the interest rate that is implicit in the
lease. The incremental borrowing rate is the estimated rate that
the Group would have to pay to borrow the same amount over a
similar term, and with similar security to obtain an asset of
equivalent value. This rate is adjusted should the lessee entity
have a different risk profile to that of the Group.
Lease payments included in the measurement of the lease
liability are made up of fixed payments (including in substance
fixed), variable payments based on an index or rate, amounts
expected to be payable under a residual value guarantee and
payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced by
lease payments that are allocated between repayments of principal
and finance costs. The finance cost is the amount that produces a
constant periodic rate of interest on the remaining balance of the
lease liability.
The lease liability is reassessed when there is a change in the
lease payments. Changes in lease payments arising from a change in
the lease term or a change in the assessment of an option to
purchase a leased asset. The revised lease payments are discounted
using the Group's incremental borrowing rate at the date of
reassessment when the rate implicit in the lease cannot be readily
determined. The amount of the remeasurement of the lease liability
is reflected as an adjustment to the carrying amount of the
right-of-use asset. The exception being when the carrying amount of
the right-of-use asset has been reduced to zero then any excess is
recognised in consolidated statement profit or loss.
Payments under leases can also change when there is either a
change in the amounts expected to be paid under residual value
guarantees or when future payments change through an index or a
rate used to determine those payments, including changes in market
rental rates following a market rent review. The lease liability is
remeasured only when the adjustment to lease payments takes effect
and the revised contractual payments for the remainder of the lease
term are discounted using an unchanged discount rate. Except for
where the change in lease payments results from a change in
floating interest rates, in which case the discount rate is amended
to reflect the change in interest rates.
The remeasurement of the lease liability is dealt with by a
reduction in the carrying amount of the right-of-use asset to
reflect the full or partial termination of the lease for lease
modifications that reduce the scope of the lease. Any gain or loss
relating to the partial or full termination of the lease is
recognised in profit or loss. The right-of-use asset is adjusted
for all other lease modifications.
The Group has elected to account for short-term leases and
leases of low-value assets using the practical expedients. Instead
of recognising a right-of-use asset and lease liability, the
payments in relation to these are recognised as an expense in
consolidated statement of profit or loss on a straight-line basis
over the lease term.
On the consolidated statement of financial position,
right-of-use assets have been included in property, plant and
equipment and lease liabilities have been presented in separate
lines therein.
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired
separately are carried at cost less accumulated amortisation and
accumulated impairment losses. All finite-lived intangible assets,
including patents, are accounted for using the cost model whereby
capitalised costs are amortised on a straight-line basis over their
estimated useful lives. Residual values and useful lives are
reviewed at each reporting date The following useful lives are
applied:
-- Patents: 20 years
Impairment testing of goodwill, intangible assets and property,
plant and equipment
For impairment assessment purposes, assets are grouped at the
lowest levels for which there are largely independent cash inflows
(cash-generating units). As a result, some assets are tested
individually for impairment and some are tested at cash-generating
unit level. Goodwill is allocated to those cash-generating units
that are expected to benefit from synergies of a related business
combination and represent the lowest level within the Group at
which management monitors goodwill. Cash-generating units to which
goodwill has been allocated (determined by the Group's management
as equivalent to its operating segments) are tested for impairment
at least annually. All other individual assets or cash-generating
units are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable.
An impairment loss is recognised for the amount by which the
asset's (or cash-generating unit's) carrying amount exceeds its
recoverable amount, which is the higher of fair value less costs of
disposal and value-in-use. To determine the value-in-use,
management estimates expected future cash flows from each
cash-generating unit and determines a suitable discount rate in
order to calculate the present value of those cash flows. The data
used for impairment testing procedures are directly linked to the
Group's latest approved budget, adjusted as necessary to exclude
the effects of future reorganisations and asset enhancements.
Discount factors are determined individually for each
cash-generating unit and reflect current market assessments of the
time value of money and asset-specific risk factors.
Impairment losses for cash-generating units reduce first the
carrying amount of any goodwill allocated to that cash-generating
unit. Any remaining impairment loss is charged pro rata to the
other assets in the cash-generating unit. With the exception of
goodwill, all assets are subsequently reassessed for indications
that an impairment loss previously recognised may no longer exist.
An impairment loss is reversed if the asset's or cash-generating
unit's recoverable amount exceeds its carrying amount.
Development assets
Development assets are stated at the lower of cost and net
realisable value. Cost comprises direct materials and overheads
that have been incurred in furthering the development of a project
towards financial close, when project financing is in place so that
the project undertaking can commence construction. Net realisable
value represents the costs plus an estimated development premium to
be earned on the costs at financial close of a project.
Financial instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when
the Group becomes a party to the contractual provisions of the
financial instrument and are measured initially at fair value
adjusted for transaction costs, except for those carried at fair
value through profit or loss which are measured initially at fair
value, and trade receivables that do not contain a significant
financing component, which are measured at the transaction price in
accordance with IFRS 15. Subsequent measurement of financial assets
and financial liabilities is described below.
Financial assets are derecognised when the contractual rights to
the cash flows from the financial asset expire, or when the
financial asset and substantially all the risks and rewards are
transferred. A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires. If the Group issues
equity instruments to a creditor to extinguish all or part of a
financial liability, the Group recognises in profit or loss the
difference between the carrying amount of the financial liability
(or part thereof) extinguished and the measurement of the equity
instruments issued.
Classification and subsequent measurement of financial
assets
For the purpose of subsequent measurement financial assets,
other than those designated and effective as hedging instruments,
are classified into the following categories upon initial
recognition:
-- amortised cost
-- fair value through profit or loss (FVTPL)
-- fair value through other comprehensive income (FVOCI)
In the periods presented, the Group does not have any financial
assets categorised as FVOCI.
The classification is determined by both:
-- the Group's business model for managing the financial asset; and
-- the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are
recognised in consolidated statement of profit or loss are
presented within finance costs or finance income, except for
impairment of trade receivables which is presented within
administrative expenses.
Financial assets at amortised cost and impairment
Financial assets are measured at amortised cost if the assets
meet the following conditions (and are not designated at
FVTPL):
-- they are held within the business model whose objective is to
hold the financial asset and collect its contractual cash
flows;
-- the contractual terms of the financial assets give rise to
cash flows that are solely payments of principal and interest on
the principal amount outstanding.
After initial recognition, they are measured at amortised cost
using the effective interest method. Discounting is omitted where
the effect of discounting is immaterial. The Group and Company's
cash and cash equivalents, trade and most other receivables fall
into this category of financial instruments.
The Group and Company makes use of a simplified approach in
accounting for trade and other receivables and records the loss
allowance as lifetime expected credit losses. These are the
expected shortfalls in contractual cash flows, considering the
potential for default at any point during the life of the financial
instrument. In calculating, the Group uses its historical
experience, external indicators and forward-looking information to
calculate the expected credit losses.
Individually significant receivables are considered for
impairment when they are past due or when other objective evidence
is received that a specific counterparty will default. Receivables
that are not considered to be individually impaired are reviewed
for impairment in groups, which are determined by reference to the
industry and region of the counterparty and other shared credit
risk characteristics. The impairment loss estimate is then based on
recent historical counterparty default rates for each identified
group.
In measuring the expected credit losses, the trade receivables
have been assessed on a collective basis as they possess shared
credit risk characteristics. They have been grouped based on the
days past due and also according to the geographical location of
customers.
The expected loss rates are based on the payment profile for
sales over the past 48 months before 31 December 2021 and 1 January
respectively as well as the corresponding historical credit losses
during that period. The historical rates are adjusted to reflect
current and forward-looking macroeconomic factors affecting the
customer's ability to settle the amount outstanding. The Group has
identified gross domestic product (GDP) and unemployment rates in
the countries in which the customers are domiciled to be the most
relevant factors and accordingly adjusts historical loss rates for
expected changes in these factors. However, given the short period
exposed to credit risk, the impact of these macroeconomic factors
has not been considered significant within the reporting
period.
Classification and subsequent measurement of financial
liabilities
The Group and Company's financial liabilities include
borrowings, lease liabilities, trade and other payables and
derivative financial instruments.
Financial liabilities are measured subsequently at amortised
cost using the effective interest method except for derivatives and
financial liabilities designated at FVTPL, which are carried
subsequently at fair value with gains or losses recognised in
profit or loss (other than derivative financial instruments that
are designated and effective as hedging instruments). All
interest-related charges and, if applicable, changes in an
instrument's fair value that are reported in profit or loss are
included within finance costs or finance income.
Fair values
For financial reporting purposes, fair value measurements are
categorised into Level 1, 2 or 3 based on the degree to which
inputs to the fair value measurements are observable and the
significance of the inputs to the fair value measurement in its
entirety, which are described as follows:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities
Level 2: valuation techniques for which the lowest level of
inputs which have a significant effect on the recorded fair value
are observable, either directly or indirectly
Level 3: valuation techniques for which the lowest level of
inputs that have a significant effect on the recorded fair value
are not based on observable market data
Income taxes
Tax expense recognised in consolidated statement of profit or
loss comprises the sum of deferred tax and current tax not
recognised in consolidated statement of other comprehensive income
or directly in equity.
Calculation of current tax is based on tax rates and tax laws
that have been enacted or substantively enacted by the end of the
reporting financial year. Deferred income taxes are calculated
using the liability method.
Deferred tax assets are recognised to the extent that it is
probable that the underlying tax loss or deductible temporary
difference will be utilised against future taxable income. This is
assessed based on the Group's forecast of future operating results,
adjusted for significant non-taxable income and expenses and
specific limits on the use of any unused tax loss or credit.
Deferred tax liabilities are generally recognised in full,
although IAS 12 'Income Taxes' specifies limited exemptions. As a
result of these exemptions the Group does not recognise deferred
tax on temporary differences relating to goodwill, or to its
investments in subsidiaries.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits, together with other short-term, highly liquid investments
maturing within 90 days from the date of acquisition that are
readily convertible into known amounts of cash and which are
subject to an insignificant risk of changes in value.
Non-current assets and liabilities classified as held for sale
and discontinued operations
Non-current assets classified as held for sale are presented
separately and measured at the lower of their carrying amounts
immediately prior to their classification as held for sale and
their fair value less costs to sell. However, some held for sale
assets such as financial assets or deferred tax assets, continue to
be measured in accordance with the Group's relevant accounting
policy for those assets. Once classified as held for sale, the
assets are not subject to depreciation or amortisation.
Any profit or loss arising from the sale or remeasurement of
discontinued operations is presented as part of a single line item,
profit or loss from discontinued operations (see also policy on
profit or loss from discontinued operations above).
Equity, reserves and dividend payments
Share capital represents the nominal (par) value of shares that
have been issued. Share premium includes any premiums received on
issue of share capital. Any transaction costs associated with the
issuing of shares are deducted from share premium, net of any
related income tax benefits.
Accumulated deficit includes all current and prior financial
year retained losses. All transactions with owners of the parent
are recorded separately within equity. Dividend distributions
payable to equity shareholders are included in other liabilities
when the dividends have been approved in a general meeting prior to
the reporting date.
Share-based payments
All goods and services received in exchange for the grant of any
share-based payment are measured at their fair values. The Company
issues equity- settled share-based payments in the form of share
options and warrants to certain Directors, employees and
advisers.
Equity-settled share-based payments are made in settlement of
professional and other costs. These payments are measured at the
fair value of the services provided which will normally equate to
the invoiced fees and charged to the consolidated statement of
profit or loss, share premium account or are capitalised according
to the nature of the fees incurred.
Where employees are rewarded using share-based payments, the
fair value of employees' services is determined indirectly by
reference to the fair value of the equity instruments granted. This
fair value is appraised at the grant date and excludes the impact
of non-market vesting conditions (for example profitability and
sales growth targets and performance conditions). Fair value is
estimated using the Black-Scholes valuation model. The expected
life used in the model has been adjusted on the basis of
management's best estimate for the effects of non- transferability,
exercise restrictions and behavioural considerations. All
share-based remuneration is ultimately recognised as an expense in
profit or loss with a corresponding credit to retained earnings. If
vesting years or other vesting conditions apply, the expense is
allocated over the vesting year, based on the best available
estimate of the number of share options expected to vest.
Non-market vesting conditions are included in assumptions about
the number of options that are expected to become exercisable.
Estimates are subsequently revised if there is any indication that
the number of share options expected to vest differs from previous
estimates. Any adjustment to cumulative share-based compensation
resulting from a revision is recognised in the current financial
year. The number of vested options ultimately exercised by holders
does not impact the expense recorded in any financial year.
Upon exercise of share options, the proceeds received, net of
any directly attributable transaction costs, are allocated to share
capital up to the nominal (or par) value of the shares issued with
any excess being recorded as share premium.
Warrants
Share warrants issued to shareholders in connection with share
capital issues are measured at fair value at the date of issue and
treated as a separate component of equity, in Other Reserves. Fair
value is determined at the grant date and is estimated using the
Black-Scholes valuation model. Share warrants issued separately to
Directors, employees and advisers are accounted for in accordance
with the policy on share-based payments.
Post-employment benefit plans
The Group provides post-employment benefit plans through various
defined contribution plans.
Defined contribution plans
The Group pays fixed contributions into independent entities in
relation to several retirement plans and insurances for individual
employees. The Group has no legal or constructive obligations to
pay contributions in addition to its fixed contributions, which are
recognised as an expense in the period that related employee
services are received.
Short-term employee benefits
A liability is recognised for benefits accruing to employees in
respect of wages and salaries, annual leave and sick leave in the
period the related service is rendered at the undiscounted amount
of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits
are measured at the undiscounted amount of the benefits expected to
be paid in exchange for the related service.
Provisions, contingent assets and contingent liabilities
Provisions for legal disputes, onerous contracts or other claims
are recognised when the Group has a present legal or constructive
obligation as a result of a past event, it is probable that an
outflow of economic resources will be required from the Group and
amounts can be estimated reliably. Timing or amount of the outflow
may still be uncertain.
Restructuring provisions are recognised only if a detailed
formal plan for the restructuring exists and management has either
communicated the plan's main features to those affected or started
implementation. Provisions are not recognised for future operating
losses.
Any reimbursement that the Group is virtually certain to collect
from a third party with respect to the obligation is recognised as
a separate asset. However, this asset may not exceed the amount of
the related provision.
No liability is recognised if an outflow of economic resources
as a result of present obligations is not probable. Such situations
are disclosed as contingent liabilities unless the outflow of
resources is remote.
4. Significant management judgement in applying accounting
policies and estimation uncertainty
When preparing the financial statements, management makes a
number of judgements, estimates and assumptions about the
recognition and measurement of assets, liabilities, income and
expenses.
Significant management judgements
The following are significant management judgements in applying
the accounting policies of the Group that have the most significant
effect on the financial statements.
Going concern
As described in the basis of preparation and going concern in
Note 3 above, the validity of the going concern basis is dependent
upon the achievement of management forecasts taking account of
reasonably plausible changes in trading performance and market
conditions, which include the continued impact of the Covid-19
pandemic and any related operational and execution delays caused by
it. After undertaking the assessments and considering the
uncertainties set out above, the Directors have a reasonable
expectation that the Group and the Company has adequate resources
to continue to operate for the foreseeable future. Furthermore, the
Directors are not aware of any material uncertainties that may cast
significant doubt upon the Group and Company's ability to continue
as a going concern.
Control assessment in a business combination.
As disclosed in Note 19, the Group owns 50.02% of the voting
rights in Newry Biomass Limited. One other company owns the
remaining voting rights. Management has reassessed its involvement
in Newry Biomass Limited in accordance with IFRS 10's revised
control definition and guidance and has concluded that, based on
its sufficiently dominant voting interests to direct its
activities, it has control of Newry Biomass Limited.
Interests in joint ventures
The Group holds 50.1% of the share capital of EQTEC Synergy
Projects Limited but this entity is considered to be a joint
venture as decisions about the relevant activities requires the
unanimous consent of both the Group and the joint venture
partner.
The Group holds 49% of the share capital of Synergy Karlovac
d.o.o. and Synergy Belisce d.o.o. However, this entity is
considered to be a joint venture of the Group as decisions about
the relevant activities requires the unanimous consent of both the
Group and the joint venture partner.
Revenue
As revenue from construction contracts is recognised over time,
the amount of revenue recognised in a reporting period depends on
the extent to which the performance obligation has been satisfied.
It also requires significant judgment in determining the estimated
costs required to complete the promised work when applying the
cost-to-cost method.
Deferred tax assets
Deferred tax is recognised based on differences between the
carrying value of assets and liabilities and the tax value of
assets and liabilities. Deferred tax assets are only recognised to
the extent that the Group estimates that future taxable profits
will be available to offset them. The Group and Company has not
recognised any deferred tax assets in the current or prior
financial years.
Estimation uncertainty
Information about estimates and assumptions that have the most
significant effect on recognition and measurement of assets,
liabilities, income and expenses is provided below. Actual results
may be substantially different.
Impairment of goodwill and non-financial assets
Determining whether goodwill and non-financial assets are
impaired requires an estimation of the value in use of the cash
generating units to which the assets have been allocated. The value
in use calculation requires the directors to estimate the future
cash flows to arise from the cash-generating unit and a suitable
discount rate in order to calculate present value. Where the actual
cash flows are less than expected, a material impairment may arise.
The estimate for future cash flows includes consideration of
possible delays due to Covid-19. The total property, plant and
equipment reversal of impairment charges during the financial year
as included in Note 17 amounted to EURNil (2020: EURNil), while the
impairment for goodwill during the financial year as included in
Note 18 amounted to EURNil (2020: EURNil).
Provision for impairment of financial assets - Group
Determining whether the carrying value of financial assets has
been impaired requires an estimation of the value in use of the
investment in associated undertakings and joint venture vehicles.
The value in use calculation requires the directors to estimate the
future cash flows expected to arrive from these vehicles and a
suitable discount rate in order to calculate present value. After
reviewing these calculations, the directors are satisfied that a
net impairment cost of EURNil (2020: EURNil) be recognised in the
Group accounts of EQTEC plc.
Provision for impairment of investment in subsidiaries -
Company
Determining whether the carrying value of the Company's
investment in subsidiaries has been impaired requires an estimation
of the value in use of the investment in subsidiaries. The value in
use calculation requires the directors to estimate the future cash
flows expected to arrive from these vehicles and a suitable
discount rate in order to calculate present value. After reviewing
these calculations, the directors are satisfied that a net
impairment cost of EURNil (2020: EURNil) be recognised in the
Company accounts of EQTEC plc.
Useful lives and residual values of intangible assets
Intangible assets are amortised over their useful lives taking
into account, where appropriate, residual values. Assessment of
useful lives and residual values are performed annually, taking
into account factors such as technological innovation, market
information and management considerations. In assessing the
residual value of an asset, its remaining life, projected disposal
value and future market conditions are taken into account. Detail
on intangible assets can be found in note 18.
Allowances for impairment of trade receivables
The Group estimates the allowance for doubtful trade receivables
based on assessment of specific accounts where the Group has
objective evidence comprising default in payment terms or
significant financial difficulty that certain customers are unable
to meet their financial obligations. In these cases, judgment used
was based on the best available facts and circumstances including
but not limited to, the length of relationship. The Group and
Company measure expected credit losses of a financial instrument in
a way that reflects an unbiased and probability-weighted amount
that is determined by evaluating a range of possible outcomes, the
time value of money and information about past events, current
conditions and forecasts of future economic conditions. When
measuring ECL the Group and Company use reasonable and supportable
forward-looking information, which is based on assumptions for the
future movement of different economic drivers and how these drivers
will affect each other. At 31 December 2021, provisions for
doubtful debts amounted to EUR475,687 which represents 9% of trade
receivables at that date (31 December 2020: EUR475,687- 74%) (see
note 25).
Share based payments and warrants
The calculation of the fair value of equity-settled share-based
awards and warrants issued in connection with share issues and the
resulting charge to the consolidated statement of profit or loss or
share-based payment reserve requires assumptions to be made
regarding future events and market conditions. These assumptions
include the future volatility of the Company's share price. These
assumptions are then applied to a recognised valuation model in
order to calculate the fair value of the awards at the date of
grant (See Notes 10 and 27).
Estimating impairment of development assets
Management estimates the net realisable values of development
assets, taking into account the most reliable evidence available at
each reporting date. The future realisation of these development
assets may be affected by market-driven changes that may reduce
future prices/premiums (See Note 24).
5. FINANCIAL RISK MANAGEMENT
Financial risk management objectives and policies
The Group and Company's activities expose it to a variety of
financial risks: credit risk, liquidity risk, interest rate risk
and foreign currency exchange risk.
The Group and Company's financial risk management programme aims
to manage the Group's exposure to the aforementioned risks in order
to minimise the potential adverse effects on the financial
performance of the Group and Company. The Group and Company seeks
to minimise the effects of these risks by monitoring the working
capital position, cash flows and interest rate exposure of the
Group and Company. There is close involvement by members of the
Board of Directors in the day-to-day running of the business.
Many of the Group and Company's transactions are carried out in
Pounds Sterling.
Credit risk
Credit risk is the risk that a counterparty fails to discharge
an obligation to the Group and Company. The Group and Company is
exposed to credit risk from financial assets including cash and
cash equivalents held at banks, trade and other receivables and
loans receivable from project development undertakings.
The Group's maximum exposure to credit risk is represented by
the balance sheet amount of each financial asset:
2021 2020
EUR EUR
Loans receivable from project development
undertakings 3,000,469 482,537
Trade and other receivables 6,876,747 894,531
Cash and cash equivalents 6,446,217 6,394,791
The Company's maximum exposure to credit risk is represented by
the balance sheet amount of each financial asset:
2021 2020
EUR EUR
Loans receivable from project development
undertakings 613,678 243,598
Trade and other receivables 14,507,848 2,703,491
Cash and cash equivalents 4,845,633 6,111,864
The Group and Company's credit risk is primarily attributable to
its loans receivable from project development undertakings and
trade and other receivables.
Credit risk (continued)
The Group has adopted procedures in extending credit terms to
customers and in monitoring its credit risk. The Group's exposure
to credit risk arises from defaulting customers, with a maximum
exposure equal to the carrying amount of the related receivables.
Provisions are made for impairment of trade receivables when there
is default of payment terms and significant financial difficulty.
On-going credit evaluation is performed on the financial condition
of accounts receivable at operating unit level at least on a
monthly basis.
The Group had risk exposure to the following counterparties at
year-end:
2021 2020
EUR EUR
Loans receivable from project development
undertakings
Loan receivable from Logik Wte Limited 1,538,420 170,561
Loan receivable from Shankley Biogas
Limited 848,371 68,378
Trade and other receivables
Receivable from Synergy Karlovac d.o.o. 2,202,884 -
Receivable from Synergy Belisce d.o.o. 1,962,925 -
Apart from the above, the Group does not have significant risk
exposure to any single counterparty or any group of counterparties
having similar characteristics. The Group defines counterparties as
having similar characteristics if they are related parties.
Concentration of credit risk related to the above companies did not
exceed 20% of gross monetary assets at any time during the year.
Concentration of credit risk to any other counterparty did not
exceed 5% of gross monetary assets at any time during the financial
year.
Exposure to credit risk on cash deposits and liquid funds is
monitored by directors. Cash held on deposit is with financial
institutions in the Ba rating category of Moody's (2020: Ba). The
directors are of the opinion that the likelihood of default by a
counter party leading to material loss is minimal. The
reconciliation of loss allowance is included in Note 25.
Liquidity risk
The Group and Company's liquidity is managed by ensuring that
sufficient facilities are available for the Group and Company's
operations from diverse funding sources. The Group uses cash flow
forecasts to regularly monitor the funding requirements of the
Group. The Group's operations are funded by cash generated from
financing activities, borrowings from banks and investors and
proceeds from the issuance of ordinary share capital.
The table below details the maturity of the Group's liabilities
as at 31 December 2021:
After
Up to 1 year 1 - 5 5 years Total
years
Notes EUR EUR EUR EUR
----------------- ------ --------------- -------- --------- ----------
Trade and other
payables 31 6,921,806 - - 6,921,806
Investor loans 29 - - - -
Bank overdraft 29 - - - -
6,921,806 - - 6,921,806
================= ====== =============== ======== ========= ==========
The table below details the maturity of the Group's liabilities
as at 31 December 2020:
After
Up to 1 year 1 - 5 5 years Total
years
Notes EUR EUR EUR EUR
----------------- ------ --------------- -------- --------- ----------
Trade and other
payables 31 3,183,980 - - 3,183,980
Investor loans 29 896,641 - - 896,641
Bank overdraft 29 124,210 - - 124,210
4,204,831 - - 4,204,831
================= ====== =============== ======== ========= ==========
Maturity of all Company's liabilities as at 31 December 2021 and
31 December 2020 are up to 1 year. Refer to Note 29 and 31 for the
outstanding balance.
Interest rate risk
The primary source of the Group's interest rate risk relates to
bank loans and other debt instruments while the Company's interest
rate risk relates to debt instruments. The interest rates on these
liabilities are disclosed in Note 29.
Interest rate risk (continued)
The Group's bank borrowings and other debt instruments
(excluding amounts in the disposal group) amounted to EURNil and
EUR1,020,851 in 31 December 2021 and 31 December 2020,
respectively. The Company's debt instruments amounted to EURNil and
EUR896,641 in 31 December 2021 and 31 December 2020,
respectively.
The interest rate risk is managed by the Group and Company by
maintaining an appropriate mix of fixed and floating rate
borrowings. The Group does not engage in hedging activities. Bank
borrowings and certain debt instruments are arranged at floating
rates which are mainly based upon EURIBOR and the prime lending
rate of financial institutions thus exposing the Group to cash flow
interest rate risk. The other remaining debt instruments were
arranged at fixed interest rates and expose the Group to a fixed
cash outflow.
These bank borrowings and debt instruments are mostly
medium-term to long-term in nature. Interest rates on loans
received from investors and shareholders are fixed in some cases
while others are a fixed percentage greater than current prime
lending rates. 'Medium-term' refers to bank borrowings and debt
instruments repayable between 2 and 5 years and 'long-term' to bank
borrowings repayable after more than 5 years.
The sensitivity analysis below has been determined based on the
exposure to interest rates for non-derivative instruments at the
end of the reporting financial year. For floating rate liabilities,
the analysis is prepared assuming that the amount of the liability
outstanding at the end of the financial year was outstanding for
the whole year. A 50-basis point increase or decrease is used when
reporting interest rate risk internally to key management personnel
and represents management's assessment of the reasonably possible
changes in interest rates.
If interest rates have been 50 basis points higher/lower and all
other variables were held constant, the Group's loss for the
financial year ended 31 December 2021 would increase/decrease by
EURNil (2020: increase/decrease by EUR621) with a corresponding
decrease/increase in equity.
The Group's sensitivity to interest rates has decreased during
the current financial year mainly due to the repayment of investor
loans in EQTEC plc in the financial year.
Foreign exchange risk
The Group and Company is mainly exposed to future changes in the
Sterling, the US Dollar and the Croatian Kuna relative to the Euro.
These risks are managed by monthly review of Sterling, US Dollar
and Croatian Kuna denominated monetary assets and monetary
liabilities and assessment of the potential exchange rate
fluctuation exposure. The Group and Company's exposure to foreign
exchange risk is not actively managed. Management will reassess
their strategy to foreign exchange risk in the future.
The carrying amount of the Group's foreign currency denominated
monetary assets and monetary liabilities at the end of the
reporting financial year are as follows:
Liabilities Assets
2021 2020 2021 2020
EUR EUR EUR EUR
Sterling 3,813,537 2,722,298 8,208,131 6,441,771
US Dollar - 984,906 25,695 38,354
Croatian Kuna 240,247 - 1,212,271 -
The carrying amount of the Company's foreign currency
denominated monetary assets and monetary liabilities at the end of
the reporting financial year are as follows:
Liabilities Assets
2021 2020 2021 2020
EUR EUR EUR EUR
Sterling 169,433 461,909 12,822,699 7,221,106
US Dollar - 984,906 45,549 54,661
The following table details the Group and Company's sensitivity
to a 10% increase and decrease in the Euro against the relevant
foreign currencies. 10% is the sensitivity rate used when reporting
foreign currency risk internally to key management personnel and
represents management's assessment of the reasonably possible
change in foreign exchange rates. The sensitivity analysis includes
only outstanding foreign currency denominated monetary items and
adjusts their translation at the year-end for a 10% change in
foreign currency rates. The sensitivity analysis includes external
loans as well as loans to foreign operations within the Group where
the denomination of the loan is in the currency other than the
currency of the lender or the borrower. A positive number below
indicates an increase in profit where the Euro strengthens 10%
against the relevant currency. For a 10% weakening of the Euro
against the relative currency, there would be a comparable impact
on the loss, and the balances below will be negative.
Group Company
2021 2020 31 Dec 2021 31 Dec 2020
EUR EUR EUR EUR
Sterling Impact:
Profit and loss/equity 443,898 375,704 1,278,108 682,747
US Dollar Impact:
Profit & Loss/Equity 2,288 95,611 4,056 93,964
Croatian Kuna: Profit 98,184 - - -
and loss/equity
Foreign exchange risk (continued)
The Group and Company's sensitivity to foreign currency has
increased during the current financial year mainly due to the
placing of equity for sterling in the financial year, coupled with
the set up of a new Croatian subsidiary.
Market risk
The Group's activities expose it primarily to the financial
risks of changes in foreign currency exchange rates and interest
rates, which are detailed above. There has been no change to the
Group's exposure to market risks or the manner in which it manages
and measures the risk.
Price risk
The Group is exposed to equity price risk in respect of its
investment in Metal NRG plc, which is listed on the London Stock
Exchange (see Note 22).
The investment in Metal NRG plc is considered a long-term,
strategic investment. In accordance with the Group's policies, no
specific hedging activities are undertaken in relation to these
investments. The investments are continuously monitored and voting
rights arising from these equity instruments are utilised in the
Group's favour.
The sensitivity analyses below have been determined based on the
exposure to equity price risks at the reporting date. If the quoted
stock price for these securities increased or decreased by 5%, the
net loss for the year ended 31 December 2021 and 2020 would
increase/decrease by EUR25,349 (2020: Not applicable) as a result
of the changes in fair value of the investments in listed
shares.
6. CAPITAL MANAGEMENT POLICIES AND PROCEDURES
The Group manages its capital to ensure that the Group is able
to continue as a going concern while maximising the return to
shareholders through the optimisation of the debt and equity
balance.
The capital structure of the company consists of financial
liabilities, cash and cash equivalents and equity attributable to
the equity holders of the parent company.
The Group's management reviews the capital structure on a yearly
basis. As part of the review, management considers the cost of
capital and risks associated with it. The Group's overall strategy
on capital risk management is to continue to improve the ratio of
debt to equity.
The Group manages the capital structure and makes adjustments to
it in the light of changes in economic conditions and the risk
characteristics of the underlying assets. In order to maintain or
adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, return capital to shareholders,
issue new shares, or sell assets to reduce debt.
No changes were made in the objectives, policies or processes
for managing capital during the years ended 31 December 2021 and
2020.
The gearing ratio of the Group for the financial year presented
is as follows:
31 Dec 2021 31 Dec 2020
-------------------------- ------------ ------------
EUR EUR
Borrowings - 1,020,851
Lease liabilities 257,708 191,707
Cash and bank balances (6,446,217) (6,394,791)
Net debt (6,188,509) (5,182,233)
Equity 45,764,488 27,524,725
-------------------------- ------------ ------------
Net debt to equity ratio (14%) (19%)
-------------------------- ------------ ------------
7. SEGMENT INFORMATION
Information reported to the chief operating decision maker for
the purposes of resource allocation and assessment of segment
performance focuses on the products and services sold to customers.
The Group's reportable segments under IFRS 8 Operating Segments are
as follows:
Technology Sales: Being the sale of Gasification Technology and
associated Engineering and Design Services;
Power Generation: Being the development and operation of
renewable energy electricity and heat generating plants.
The chief operating decision maker is the Chief Executive
Officer. Information regarding the Group's current reportable
segment is presented below. The following is an analysis of the
Group's revenue and results from continuing operations by
reportable segment:
Segment Revenue Segment Profit/(Loss)
2021 2020 2021 2020
EUR EUR EUR EUR
Technology
Sales 9,171,764 2,234,727 995,000 (878,877)
Power Generation - - (328) (11,094)
Total from
continuing
operations 9,171,764 2,234,727 994,672 (889,971)
Central administration costs and directors'
salaries (3,554,854) (2,548,506)
Impairment costs (5,498) (17,250)
Other income - 61,922
Other losses (1,418,860) (170,059)
Change in fair value of (250,378) -
financial investments
Foreign currency gains 348,885 211,337
Employee share-based compensation (205,648) (1,297,309)
Share of results from equity (24,188) -
accounted investments
Gains from sales to equity (211,478) -
accounted investments deferred
Gain arising from loss 9,957 -
of control of subsidiaries
Finance income 134,069 17,329
Finance costs (517,108) (1,206,392)
Loss before taxation (continuing
operations) (4,700,429) (5,838,899)
Revenue reported above represents revenue generated from
associated companies, jointly controlled entities and external
customers. Inter-segment sales for the financial year amounted to
EURNil (2020: EURNil). Included in revenues in the Technology Sales
Segment are revenues of EUR7,084,872 (2020: EUR1,980,000) which
arose from sales to associate undertakings and joint ventures of
EQTEC plc. This represents 77% (2020: 89%) of total revenues in the
financial year. A breakdown of the turnover by associated
undertaking and joint venture is set out in Note 34 Related Party
Transactions.
The accounting policies of the reportable segments are the same
as the Group's accounting policies described in Note 3. Segment
profit or loss represents the profit or loss earned by each segment
without allocation of central administration costs and directors'
salaries, other operating income, share of profit or loss of
jointly controlled entities, profit on disposal of jointly
controlled entities, interest costs, interest income and income tax
expense. This is the measure reported to the chief operating
decision maker for the purpose of resource allocation and
assessment of segment performance.
Other segment information:
Depreciation and amortisation Additions to non-current
assets
2021 2020 2021 2020
EUR EUR EUR EUR
Technology sales 84,381 83,463 195,643 -
Power Generation - - - -
Head Office 144,824 - 2,708,474 -
229,205 83,463 2,904,117 -
In addition to the depreciation and amortisation reported above,
reversal of impairment losses of EURNil (2020: EURNil) were
recognised in respect of property, plant, equipment and intangible
assets and goodwill respectively.
The Group operates in four principal geographical areas:
Republic of Ireland (country of domicile), the European Union, the
United States of America and the United Kingdom. The Group's
revenue from continuing operations from external customers and
information about its non-current assets* by geographical location
are detailed below:
Revenue from Associates Non-current assets*
and External Customers
2021 2020 2021 2020
EUR EUR EUR EUR
Republic of - - - -
Ireland
EU 6,734,156 254,727 2,720,427 187,792
United States
of America 2,437,608 1,980,000 - -
United Kingdom - - 147,808 -
9,171,764 2,234,727 2,868,235 187,792
*Non-current assets excluding goodwill, financial instruments,
deferred tax and investment in jointly controlled entities and
associates.
The management information provided to the chief operating
decision maker does not include an analysis by reportable segment
of assets and liabilities and accordingly no analysis by reportable
segment of total assets or total liabilities is disclosed.
8. REVENUE
An analysis of the Group's revenue for the financial year
(excluding interest revenue), from continuing and discontinued
operations, is as follows:
Continuing Discontinued
2021 2020 2021 2020
EUR EUR EUR EUR
Revenue from technology
sales 8,022,509 2,234,727 - -
Revenue from the
generation
of energy from wind - - - 135,644
Revenue from development 1,149,255 - - -
fees
9,171,764 2,234,727 - 135,644
9. OTHER INCOME
Continuing Discontinued
2021 2020 2021 2020
EUR EUR EUR EUR
Operating grants - 39,782 - -
Reimbursement of wind development - 16,449 - -
costs
Other income - 5,691 - -
- 61,922 - -
10. EMPLOYEE SHARE-BASED PAYMENTS
Continuing Discontinued
2021 2020 2021 2020
EUR EUR EUR EUR
Expensed in the year 205,648 1,297,309 - -
The share-based payment expense includes the cost of employee
warrants and options granted and vested in the year (Note 27).
11. FINANCE COSTS AND INCOME
Continuing Discontinued
2021 2020 2021 2020
Finance Costs EUR EUR EUR EUR
Interest on loans,
bank facilities and
overdrafts 41,818 1,149,141 - 18,382
Fees on early redemption
of loans 466,929 50,149 - -
Interest expense for
leasing arrangements 8,341 7,102 - -
Other interest 20 - - -
517,108 1,206,392 - 18,382
Finance Income
Interest receivable
on loans advanced 121,459 13,397 - -
Interest receivable
on deferred consideration 12,610 3,932 - -
Interest receivable
on bank deposits - - 3 3
134,069 17,329 3 3
Included in finance costs under continuing activities is an
amount of EURNil (2020: EUR522,349) with respect to lender warrants
granted during the year (see Note 27).
12. OTHER LOSSES
Continuing Discontinued
2021 2020 2021 2020
EUR EUR EUR EUR
Loss on debt for equity swap 1,418,860 170,059 - -
During the financial year the Group extinguished some of its
financial liabilities by issuing equity instruments. In accordance
with IFRIC 19 Extinguishing Financial Liabilities with Equity
Instruments, the loss recognised on these transactions was
EUR1,418,860 (2020: EUR170,059).
13. EMPLOYEE DATA 2021 2020
EUR EUR
The aggregate payroll costs of employees
(including executive directors) in the
Group were as follows:
Salaries 1,575,325 858,915
Social insurance costs 284,643 163,423
Pension costs - defined contribution
plans 34,134 (16,932)
Termination payments 241,061 -
Other compensation costs:
Cost of share-based payments 205,648 1,297,309
Short term incentives 506,999 -
Private health insurance and other insurance 15,071 -
costs
2,862,881 2,302,715
No. No.
Average number of employees (including
executive directors) 19 13
Company
Average number of employees (including executive
directors) 4 2
Capitalised employee costs in the financial year amounted to
EURNil (2020 EURNil).
14. LOSS BEFORE TAXATION 2021 2020
EUR EUR
Loss before taxation on continuing
operations is stated after charging/(crediting):
Depreciation of leasehold buildings
(Note 17) 156,520 83,463
Amortisation of intangible assets 72,685 -
(Note 18)
Impairment of investments (Note 22) - 17,250
Movement in fair value of investments 250,378 -
(Note 22)
Research and development 17,991 26,412
Gains on foreign exchange (348,885) (211,337)
Directors' remuneration: for services
as directors 111,234 486,122
(Note 34). for salaries as management 730,496 408,948
share-based
payments 86,261 1,127,141
compensation 241,061 -
for loss of
office
Impairment of development assets (Note 5,498 -
24)
2021 2020
EUR EUR
Auditor's remuneration:
Audit of Group accounts 90,000 60,000
Tax advisory services 15,000 11,000
105,000 71,000
15. INCOME TAX 2021 2020
EUR EUR
Income tax expense comprises:
Current tax expense - -
Deferred tax credit - -
Adjustment for prior financial - -
years
Tax expense - -
2021 2020
EUR EUR
Loss before taxation (4,700,429) (5,767,815)
Applicable tax 12.50% (2020:
12.50%) (587,554) (720,977)
Effects of:
Amortisation & depreciation in
excess of capital allowances 28,475 17,130
Expenses not deductible for tax
purposes 234,361 248,715
Losses carried forward 324,718 455,132
Movement in deferred tax - -
Actual tax expense - -
The tax rate used for the reconciliation above is the corporate
rate of 12.5% payable by corporate entities in Ireland on taxable
profits under tax law in that jurisdiction.
16. LOSS PER SHARE 2021 2020
EUR per EUR per
share share
Basic loss per share
From continuing operations (0.001) (0.001)
From discontinued operations - -
Total basic loss per share (0.001) (0.001)
Diluted loss per share
From continuing operations (0.001) (0.001)
From discontinued operations - -
Total diluted loss per share (0.001) (0.001)
The loss and weighted average number of ordinary shares used in
the calculation of the basic and diluted loss per share are as
follows:
2021 2020
EUR EUR
Loss for financial year attributable
to equity holders of the parent (4,700,497) (5,762,733)
Profit for the financial year from
discontinued operations used in
the calculation of basic earnings
per share from discontinued operations - 71,084
Losses used in the calculation
of basic loss per share from continuing
operations (4,700,497) (5,833,817)
No. No.
Weighted average number of ordinary
shares for
the purposes of basic loss per
share 7,956,449,726 5,435,107,932
Weighted average number of ordinary
shares for
the purposes of diluted loss per
share 7,956,449,726 5,435,107,932
Dilutive and anti-dilutive potential ordinary shares
The following potential ordinary shares were excluded in the
diluted earnings per share calculation as they were
anti-dilutive.
2021 2020
Share warrants in issue 464,005,793 651,936,876
Share options in issue 67,304,542 33,652,271
LTIP options in issue 21,124,586 -
Total anti-dilutive shares 552,434,921 685,589,147
Details of share warrants and share options in issue outstanding
at year-end are set out in Note 27.
17. PROPERTY, PLANT AND
EQUIPMENT
Right of Office Construction
Use Assets equipment in Progress Total
Group EUR EUR EUR EUR
Cost
At 1 January 2020 354,718 181,264 2,465,103 3,001,085
Disposals - (117,922) - (117,922)
Derecognition of assets - - (2,465,103) (2,465,103)
At 31 December 2020 354,718 63,342 - 418,060
Additions 219,301 - 192,757 412,058
Exchange differences 5,297 - - 5,297
At 31 December 2021 579,316 63,342 192,757 835,415
Accumulated depreciation
At 1 January 2020 83,463 181,264 2,465,103 2,729,830
Charge for the financial year 83,463 - - 83,463
Charge on disposal - (117,922) - (117,922)
Derecognition of assets - - (2,465,103) (2,465,103)
At 31 December 2020 166,926 63,342 - 230,268
Charge for the financial year 156,520 - - 156,520
Exchange differences 1,766 - - 1,766
At 31 December 2021 325,212 63,342 - 388,554
Carrying amount
At 31 December 2020 187,792 - - 187,792
At 31 December 2021 254,104 - 192,757 446,861
Included in the net carrying amount of property, plant and
equipment are right-of-use assets as follows:
2021 2020
EUR EUR
Leasehold buildings 254,104 187,792
Office
Equipment Total
Company EUR EUR
Cost
At 1 January 2020, at 31 December
2020 and at 31 December 2021 1,233 1,233
Accumulated depreciation
At 1 January 2020, at 31 December
2020 and at 31 December 2021 1,233 1,233
Carrying amount
At 1 January 2021 - -
At 31 December 2021 - -
18. INTANGIBLE
ASSETS
Group Goodwill Patents Total
Cost EUR EUR EUR
As at 1 January 2020
and at 31 December
2020 16,710,497 - 16,710,497
Additions, separately
acquired - 2,492,059 2,492,059
As at 31 December
2021 16,710,497 2,492,059 19,202,556
Amortisation and Impairment
As at 1 January 2020 1,427,038 - 1,427,038
Impairment losses - - -
As at 31 December
2020 1,427,038 - 1,427,038
Amortisation - 72,685 72,685
Impairment losses - - -
As at 31 December
2021 1,427,038 72,685 1,499,723
Carrying value
As at 31 December
2020 15,283,459 - 15,283,459
As at 31 December
2021 15,283,459 2,419,374 17,702,833
Company Patents Total
Cost EUR EUR
As at 1 January 2020
and at 31 December - -
2020
Additions 2,492,059 2,492,059
As at 31 December 2021 2,492,059 2,492,059
Amortisation and Impairment
As at 1 January 2020
and at 31 December - -
2020
Amortisation 72,685 72,685
As at 31 December 2021 72,685 72,685
Carrying value
As at 31 December 2020 - -
As at 31 December 2021 2,419,374 2,419,374
Patents
During the year ended 31 December 2021, the Group acquired
patents from a company controlled by one of the directors. Patents
and trademarks are amortised over their estimated useful lives,
which is on average 20 years. The average remaining amortisation
period for these patents is 19.4 years (2020: Not applicable).
Goodwill
Cash-generating units
Goodwill acquired in business combinations is allocated, at
acquisition, to the cash-generating units (CGUs) that are expected
to benefit from that business combination. A CGU is the smallest
identifiable group of assets that generate cash inflows that are
largely independent of the cash inflows from other assets or group
of assets. The CGUs represent the lowest level within the Group at
which the associated goodwill is assessed for internal management
purposes and are not larger than the operating segments determined
in accordance with IFRS 8 Operating Segments. A total of 1 CGUs
(2020: 1) have been identified and these are all associated with
the Technology Sales Segment. The carrying value of the goodwill
within the Technology Sales Segment is EUR15,283,459 (2020:
EUR15,283,459).
In accordance with IAS 36 Impairment of Assets, the CGUs to
which significant amounts of goodwill have been allocated are as
follows:
2021 2020
EUR EUR
Eqtec Iberia SLU 15,283,459 15,283,459
For the purpose of impairment testing, the discount rates
applied to this CGU to which significant amounts of goodwill have
been allocated was 14% (2020: 14%) for the Eqtec Iberia CGU.
Annual test for impairment
Goodwill acquired through business combinations has been
allocated to the above CGU for the purpose of impairment testing.
Impairment of goodwill occurs when the carrying value of the CGU is
greater than the present value of the cash that it is expected to
generate (i.e. the recoverable amount). The Group reviews the
carrying value of each CGU at least annually or more frequently if
there is an indication that a CGU may be impaired.
The recoverable amount of each CGU is determined from
value-in-use calculations. The forecasts used in these calculations
are based on a financial plan approved by the Board of Directors,
plus 5-year projections forecasted by management, and specifically
excludes any future acquisition activity.
The value in use calculation represents the present value of the
future cash flows, including the terminal value, discounted at a
rate appropriate to each CGU. The real pre-tax discount rates used
is 14% (2020: 14%). These rates are based on the Group's estimated
weighted average cost of capital, adjusted for risk, and are
consistent with external sources of information.
The cash flows and the key assumptions used in the value in use
calculations are determined based on management's knowledge and
expectation of future trends in the industry. Expected future cash
flows are, however, inherently uncertain and are therefore liable
to material change over time. The key assumptions used in the value
in use calculations are subjective and include projected EBITDA
margins, net cash flows, discount rates used and the duration of
the discounted cash flow model. The estimate for future cash flows
includes consideration of possible delays due to Covid-19.
The directors performed sensitivity analysis to account for
changes in value in use calculation due to potential delays in
commencement of the projects. The following are the sensitivities
performed:
-- 1% increase in discount rate
-- 1 project delayed in 2022, 2 projects delayed in 2023, 3 projects delayed in 2024
-- Zero percentage long term growth rate (year 6 onwards)
-- 1 major anticipated project delayed until 2023
All of these sensitivity analysis resulted in no impairment. An
impairment loss of EURNil (2020: EURNil) has been calculated for
the financial year ended 31 December 2021.
19. INVESTMENT IN SUBSIDIARY UNDERTAKINGS
COMPANY
2021 2020
Investment in subsidiary EUR EUR
undertakings
At beginning of financial
year 17,869,630 16,869,625
Reclassification of inter-company
balance as contribution
to capital in Eqtec Iberia - 1,000,000
Investment in other subsidiaries 10,000 5
Transfer of investment in
subsidiaries to other subsidiary (10,003) -
undertakings
Share options and awards 124,877 -
At end of financial year 17,994,504 17,869,630
Loans to subsidiary undertakings
At beginning of financial
year - 571,304
Provision for impairment
of investment in subsidiaries - (571,304)
At end of financial year - -
The share options and awards addition reflect the cost of
share-based payments attributable to employees of subsidiary
undertakings, which are treated as capital contributions
by the Company.
During the year, the Company transferred shareholdings in
subsidiary undertakings at cost to other subsidiary undertakings.
Details of EQTEC plc subsidiaries at 31 December 2021 are as
follows:
Country of
Name Incorporation Shareholding Registered Principal
Office activity
Provision of
technical
Eqtec Iberia engineering
SLU Spain 100% 5 services
EQTEC Holdings Republic of Development of
Limited Ireland 100% 1 building projects
EQTEC UK Services
Limited (formerly
EQTEC Holdings Development of
(UK) Limited) United Kingdom 100% 2 building projects
Haverton WTV Waste-to-energy
Limited United Kingdom 100% 2 developer
Waste-to-energy
Deeside WTV Limited United Kingdom 100% 2 developer
Southport WTV
Limited (formerly
Humber Gate WTV Waste-to-energy
Limited) United Kingdom 100% 2 developer
Newry Biomass Republic of
No. 1 Limited Ireland 100% 1 Dormant company
React Biomass Republic of
Limited Ireland 100% 1 Dormant company
Reforce Energy Republic of
Limited Ireland 100% 1 Dormant company
Grass Door Limited United Kingdom 100% 3 Dormant company
Newry Biomass
Limited Northern Ireland 50.02% 4 Dormant company
Enfield Biomass
Limited United Kingdom 100% 3 Dormant company
Moneygorm Wind Republic of
Turbine Limited Ireland 100% 1 Dormant company
Republic of
Eqtec No. 1 Limited Ireland 100% 1 Dormant company
Eqtec Strategic
Project Finance
Limited United Kingdom 100% 3 Dormant company
Clay Cross Biomass
Limited United Kingdom 100% 3 Dormant company
Altilow Wind Republic of
Turbine Limited Ireland 100% 1 Dormant company
Synergy Projects Waste-to-energy
d.o.o. Croatia 100% 6 developer
EQTEC France Waste-to-energy
SAS France 100% 7 developer
The shareholding in each company above is equivalent to the
proportion of voting power held.
Key to registered offices:
1. Building 1000, City Gate, Mahon, Cork T12 W7CV, Ireland.
2. 3 Stucley Place, London NW1 8NS, England.
3. Labs Triangle, Camden Lock Market, Chalk Farm Road, London NW1 8AB, England.
4. 68 Cloughanramer Road, Carnmeen, Newry, Co. Down BT34 1QG, Northern Ireland.
5. Rosa Sensat n 9-11 Planta 5--, 08005 Barcelona, Spain.
6. Zagorska 31, HR-10000 Zagreb, Croatia.
7. 28 Cours Albert 1er, 75008 Paris, France.
The table below shows details of non-wholly owned subsidiaries
of the Group that have non-controlling interests:
Principal Proportion of ownership Profit/(loss)
place of interests and voting allocated
Name of business rights held by to non-controlling Non-controlling interests
Subsidiary and place non-controlling interests
of interests for the financial year
incorporation
2021 2020 2021 2020 2021 2020
% % EUR EUR EUR EUR
Newry
Biomass Northern
Limited Ireland 49.98 49.98 68 (5,080) (2,489,189) (2,328,986)
Individually
immaterial
subsidiaries
with non-controlling
interests 0.00 0.00 - (2) 105,000 105,000
Total 68 (5,082) (2,384,189) (2,223,986)
EQTEC plc owns 50.02% of the voting rights in Newry Biomass
Limited. One other company owns the remaining voting rights.
Management has reassessed its involvement in Newry Biomass Limited
in accordance with IFRS 10's revised control definition and
guidance and has concluded that it has control of Newry Biomass
Limited. The activities of Newry Biomass Limited are not considered
material to the Group as a whole.
No dividends were paid to the non-controlling interests during
the years ended 31 December 2021 and 2020.
During the year, the Group set up two subsidiaries, Synergy
Belisce d.o.o. and Synergy Karlovac d.o.o. that were initially
accounted for as an investment in subsidiaries. On 26 November
2021, the Group disposed of 51% of its share in the two companies
to Sense ESCO d.o.o. for proceeds of EUR2,709 (receivable after the
year-end). The Group has accounted for the remaining 49% interest
in these companies as an investment in joint ventures. The
transaction has resulted in the recognition of a gain in profit and
loss, calculated as follows:
EUR
Proceeds of disposal 2,709
Plus: Fair value of investment retained (49%) 489
Add: Carrying amount of net liabilities of investments
on the date of loss of control 6,759
Gain recognised 9,957
20. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
GROUP
2021 2020
EUR EUR
Investment in associate undertakings (a) 6,951,064 3,379,625
Investment in joint ventures (b) 1,123,120 -
8,074,184 3,379,625
COMPANY
Investment in associate undertakings (a) 6,569,432 3,379,625
a) Investment in associate undertakings
GROUP
At beginning of financial year 3,379,625 2,229,006
Derecognition of loans (1,150,619) -
Investment in shares 2,458,584 -
Loans advanced to associate undertakings 2,272,113 1,150,619
Interest accrued on loans to associate undertakings 64,693 -
Share of loss of associate undertakings (19,441) -
Adjustment in respect of unrealised sales (101,296) -
from the Group
Exchange differences 47,405 -
At end of financial year 6,951,064 3,379,625
Made up as follows:
Investment in shares in associate undertakings 4,597,855 2,229,006
Loans advanced to associate undertakings 2,384,248 1,150,619
Less: Losses recognised under the equity (31,039) -
method
6,951,064 3,379,625
Investment in associate undertakings
Details of the Group's interests in associated undertakings at
31 December 2021 is as follows:
Shareholding Principal
Activity
Name of associate County of 2021 2020
undertaking Incorporation
North Fork Operator of
Community United States biomass gasification
Power LLC of America 49% (2) 19.99% (1) power project
EQTEC Italia Italy 20.02% N/a Operator of
MDC srl biomass gasification
power project
Notes:
(1) Per the original shareholders' agreement, the share of
profits in the associate was limited to 0.1999% rising to 19.99%
thereafter.
(2) On 14 October 2021, the Group announced an additional
investment of US$2.8 million in North Fork, increasing the Group's
equity in the associate to 49%, with no restriction on the share of
profits.
EQTEC Italia MDC srl was set up originally as a subsidiary
undertaking of the Group. On 21 June 2021, it was announced that
three different parties have agreed to contribute additional
capital into EQTEC Italia MDC srl, leaving the Group with an
interest of 20.02% in the associate undertaking.
On 14 October 2021, it was announced that the Group would
provide North Fork Community Power LLC with a two-year convertible
loan facility of up to $4.5 million. The Convertible Loan Facility
will accrue interest at a rate of 10% per annum, payable annually,
and the balance outstanding (including any accrued interest) will
be convertible at the Group's option at the earliest of: the
maturity date, any default or any takeover. If the Convertible Loan
Facility were fully drawn down and converted into equity, it would
result in the Company's taking a controlling interest in North Fork
Community Power LLC. At 31 December 2021, the total of principal
and accrued interest amounted to EUR1,891,842.
On 21 June 2021, the group advanced EUR482,000 to EQTEC Italia
MDC srl by way of a five-year loan. The loan will accrue interest
at a rate of 4% per annum, and the principal and accrued interest
will become payable on the expiry date, being 18 June 2026.
Summarised financial information in respect of the Group's
interests in associated undertakings is as follows:
2021 2020
North EQTEC North EQTEC
Fork Italia Total Fork Italia Total
EUR EUR EUR EUR EUR EUR
Non-current assets 46,469 2,155,006 2,201,475 44,552 - 44,552
Current assets 23,555,070 454,946 24,010,016 17,686,647 - 17,686,647
Non-current
liabilities (19,422,943) (2,542,001) (21,964,944) (16,213,836) - (16,213,836)
Current liabilities 74,253 (110,805) (36,552) (263,150) - (263,150)
Net Assets 4,252,849 (42,854) 4,209,995 1,254,213 - 1,254,213
Reconciliation to
carrying
amount
Group's share of net
assets/(liabilities) 2,083,896 (8,589) 2,075,307 250,717 - 250,717
Carrying value of
loan
to associate 1,891,842 492,406 2,384,248 1,150,519 - 1,150,519
Adjustment in respect
of unrealised
profits
on sales from the
Group (78,846) (22,450) (101,296) - - -
Exchange differences (1,245,590) - (1,245,590) (135,427) - (135,427)
Goodwill 3,838,395 - 3,838,395 2,113,816 - 2,113,816
Carrying amount 6,489,697 461,367 6,951,064 3,379,625 - 3,379,625
Summarised income
statement
Revenue 12,888 - 12,888 22,047 - 22,047
(Loss)/Profit after
tax for period 3,481 (92,852) (89,371) 5,541 - 5,541
Other comprehensive - - - - - -
income
Total comprehensive
income/(loss) 3,481 (92,852) (89,371) (5,541) - (5,541)
Reconciliation to
Group's
share of total
comprehensive
income
Group's share of
total
comprehensive
income/(loss) (852) (18,589) (19,441) (-) (-) (-)
Group's share of
total
comprehensive
income/(loss) (852) (18,589) (19,441) (-) (-) (-)
COMPANY
2021 2020
EUR EUR
At beginning of financial year 3,379,625 2,229,006
Derecognition of loans (1,150,619) -
Investment in shares 2,448,584 -
Loans advanced to associate undertakings 1,790,113 1,150,619
Interest accrued on loans to associate undertakings 54,287 -
Exchange differences 47,442 -
At end of financial year 6,569,432 3,379,625
Made up as follows:
Investment in shares in associate undertakings 4,677,590 2,229,006
Loans advanced to associate undertakings 1,891,842 1,150,619
At end of financial year 6,569,432 3,379,625
b) Investment in joint ventures
GROUP
The Group's interests in joint ventures at the end of the reporting period
is as follows
2021 2020
EUR EUR
Synergy Belisce d.o.o. 506,664 -
Synergy Karlovac d.o.o. 519,437 -
Eqtec Synergy Projects Limited 97,019 -
Interests in joint ventures 1,123,120 -
Details of the Group's interests in joint ventures is as follows: Shareholding Principal
Activity
Name of joint County of 2021 2020
venture Incorporation
Synery Belisce Croatia 49% N/a Operator of
d.o.o. biomass gasification
power project
Synery Belisce Croatia 49% N/a Operator of
d.o.o. biomass gasification
power project
Eqtec Synergy Cyrprus 50.1% N/a Operator of
Products Limited biomass gasification
power project
The joint ventures have share capital, consisting solely of ordinary shares.
Decisions about the relevant activities of the joint ventures require
unanimous consent of the Group and the respective joint venture partners.
a) Synergy Belisce d.o.o. was set up in April 2021 as a 100% subsidiary
of Synergy Projects d.o.o., a 100% subsidiary of the Group. On 26 November
2021, the Group's Croatian project development partner, Sense ESCO d.o.o.
subscribed for additional shares in Synergy Belisce d.o.o. which resulted
in the Group owning 49% of the equity of the joint venture. Synergy Belisce
d.o.o. has acquired a 1.2 MWe waste-to-energy gasification plant in Belisce,
Croatia which had been built in 2016 around EQTEC's proprietary and patented
Advanced Gasification Technology. The plant is expected to be updated,
recommissioned and repowered for operations towards the end of 2022.
b) Synergy Karlovac d.o.o. was set up in April 2021 as a 100% subsidiary
of Synergy Projects d.o.o., a 100% subsidiary of the Group. On 26 November
2021, the Group's Croatian project development partner, Sense ESCO d.o.o.
subscribed for additional shares in Synergy Karlovac d.o.o. which resulted
in the Group owning 49% of the equity of the joint venture. Synergy Karlovac
d.o.o. Synergy Karlovac d.o.o. has acquired a 1.2 MWe waste-to-energy
gasification plant in Karlovac, Croatia which originally employed an early
gasification technology from a third party. The plant was not able to
achieve the designed operational availability and had to be closed. The
Group's intention is to redesign and reconfigure the Plant to incorporate
the patented, proprietary EQTEC Advanced Gasification Technology at the
centre. When subsequently commissioned, it will transform locally sourced
wood chips and forestry wood waste from regional forests into green electricity
for use by the local community. The plant is expected to be updated, recommissioned
and repowered for operations towards the end of 2022.
c) Eqtec Synergy Projects Limited was set up in 2020 in partnership with
its Greek strategic partners, ewerGy GmbH. The Group owns 50.1% of the
equity of the joint venture. The joint venture has signed an agreement
for the proposed acquisition of a 5MWe project in Drama, North-eastern
Greece. Once acquired, the joint venture will lead the development of
a new biomass-to-energy plant, generating 5MW green electricity from locally
and sustainably sourced forestry waste. Due diligence, including financial
and technical feasibility, has been completed.
The movement in the investment in joint ventures is as follows:
2021 2020
EUR EUR
At the beginning of the year - -
Investment in joint ventures 501 -
Fair value retained on disposal of control in subsidiary 490 -
Loans advanced to joint ventures 1,228,909 -
Interest receivable on loans to joint ventures 6,485 -
Share of loss after tax (4,747) -
Unrealised profits on sales to joint ventures (110,182) -
Exchange differences 1,664 -
Interests in joint ventures 1,123,120 -
Made up as follows:
Investment in shares in joint ventures - -
Loans advanced to associate ventures 1,237,059 -
Less: Losses recognised under the equity method (113,939) -
1,123,120 -
Summarised financial information for joint ventures accounted
for using the equity method
Set out below is the summarised financial information for the
Group's joint ventures which are accounted for using the equity
method. The information below reflects the amounts presented in the
financial statements of the joint ventures reconciled to the
carrying value of the Group's investments in joint ventures. (Note:
As this is the first year of the operation of the joint ventures,
there is no comparative figures).
Eqtec
Synergy Synergy Synergy
Belisce Karlovac Projects
2021 d.o.o. d.o.o. Limited Total
Summarised balance sheet (100%) EUR EUR EUR EUR
Non-current assets 4,043,271 3,128,485 - 7,171,756
Current assets
Cash and Cash equivalents 640 747 10,412 11,799
Other current assets 133,308 123,510 200,499 457,317
133,948 124,257 210,911 469,116
Non-current liabilities - - - -
Current liabilities
Bank overdrafts and loans 555,331 588,987 100,000 1,244,318
Other current liabilities 3,613,016 2,666,235 116,860 6,396,111
4,168,347 3,255,222 216,860 7,640,429
Net assets/(liabilities) (100%) 8,872 (2,480) (5,949) 443
Reconciliation to carrying amount:
Group's share of net assets/(liabilities) 4,347 (1,215) (2,981) 151
Carrying value of loans to joint ventures 551,808 585,251 100,000 1,237,059
Unrealised gains on sales to joint ventures (45,185) (64,997) - (110,182)
Adjustment arising on loss of control
in period (4,306) 398 - (3,908)
Carrying amount 506,664 519,437 97,019 1,123,120
2021 Eqtec
Synergy Synergy Synergy
Belisce Karlovac Projects
d.o.o. d.o.o. Limited Total
Summarised income statement (100%) EUR EUR EUR EUR
Revenue - - - -
Depreciation - - - -
Amortisation - - - -
Interest expenses - - - -
Taxation - - - -
Profit/(loss) after tax (917) (1,666) (6,949) (9,532)
Other comprehensive income - - - -
Total comprehensive income/(loss) (917) (1,666) (6,949) (9,532)
Reconciliation to Group's share of total
comprehensive income
Group's share of total comprehensive income (449) (816) (3,482) (4,747)
Group's share of total comprehensive income (449) (816) (3,482) (4,747)
21. FINANCIAL ASSETS
GROUP
2021 2020
Investment in related undertakings EUR EUR
At beginning of financial year 2,570,888 -
Advance payment on purchase of in shares
in Logik WTE Limited 1,034,825 2,570,888
Advance payment on purchase of shares in 116,272 -
Shankley Biogas Limited
Exchange differences 328,045 -
At end of financial year 4,050,030 2,570,888
Investment in Logik WTE Limited
On 8 December 2020, it was announced that the Company's wholly
owned subsidiary, Deeside WTV Limited ("Deeside"), had signed a
share purchase agreement ("SPA") with Logik Developments Limited
("Logik") to acquire full ownership of the Deeside Refuse Derived
Fuel project ("Project") through the acquisition of Logik WTE
Limited ("Project SPV"), a company incorporated in the United
Kingdom.
The key terms of the SPA are as follows:
-- Initial consideration of EUR2,570,888 (GBP2,310,000) of which
a deposit amount of EUR333,882 (GBP300,000), from which the
existing exclusivity payment of GBP100,000 will be deducted, is
payable on the signing of the agreement and the balance of
EUR2,237,006 (GBP2,010,000) payable on or before 12 months from 8
December 2021 (and which sum shall be netted off the existing debts
of Logik WTE Limited);
-- Additional deferred conditional consideration of EUR2,548,630
(GBP2,290,000) payable on the achievement of certain conditions
precedent related to development milestones of the Project.
-- The issue of a fixed dividend share in the Buyer to Logik
Developments Limited, which gives Logik Developments Limited the
right to 5% of distributable profits in Deeside WTV Limited. This
share carries no voting rights in Deeside WTV Limited.
-- An additional development premium or overage payment, subject
to a maximum further amount of EUR6.01 million (GBP5.4 million),
calculated in accordance with an agreed formula payable on the
achievement of each of the following:
Financial close on the funding for the Waste Reception &
Anaerobic Digestion plant on the site for which planning and the
necessary permits have been obtained ("Project Phase I").
Financial close as defined on the funding for the Advanced
Gasification plant on the site for which planning and the necessary
permits have been obtained ("Project Phase II").
On 6 December 2021, the Company announced that Deeside has
signed a binding supplemental agreement (the "Agreement") with
Logik. The Agreement, inter alia, set out the terms on which the
parties have agreed to vary the terms of the existing SPA signed by
Logik and Deeside (together, the "Parties"), as announced on 8
December 2020 pursuant to which Deeside agreed to acquire full
ownership of the Project SPV from Logik. Through the new Agreement
the Parties will now act in partnership and seek to develop
additional waste-to-value infrastructure on the Deeside site.
The key terms of the Agreement were as follows:
-- Deeside will acquire 32% of the share capital of the Project
SPV, the entity which holds the land and necessary planning
permissions for the Project, from Logik for a consideration of
GBP3.3 million to be paid no later than 31 March 2022. Deeside can
select to make this payment from its existing cash resources or
investment raised directly at the Project SPV level;
-- Under the Agreement, GBP500k was paid as a fee to Logik. The
Parties have agreed that this payment will be converted to equity
in the Project SPV by 31 March 2022;
-- The Project site currently comprises 6.27 hectares of land
located off Weighbridge Road in the Deeside Industrial Estate.
Under the new Agreement, the Parties have agreed that c. 2.4
hectares of the land will be retained by Logik to be used in
connection with the proposed hydrogen/biofuel project intended to
be carried out jointly between the parties;
-- The new Agreement removes any overage payments, deferred
consideration and fixed dividend sum due to Logik in the SPA, since
the Parties intend that their relationship going forward be that of
joint venture partners, rather than seller and buyer; and
-- The Parties are seeking a minimum of GBP10 million of
third-party funding in order to bring the Project to Financial
Close. Following receipt of such funding, EQTEC will invoice
GBP1,500,000 for its project development services to the Project
SPV (such fee to be reduced on a pound for pound basis if the
investment received is less than GBP10 million), subject to certain
conditions to be finalised and agreed with third-party funders.
Contracts have been exchanged but completion as defined in the
Agreement had not occurred at the year-end, and as a result Logik
WTE Limited is not considered a joint venture of the Group at 31
December 2021.
In these financial statements the full initial consideration of
EUR3,930,911 (GBP3,300,000) (2020: EUR2,570,888 (GBP2,310,000)) has
been recognised as an investment in a related undertaking and the
balance of consideration payable of EUR2,977,963 (GBP2,500,000)
(2020: EUR2,237,006 (GBP2,010,000)) has been recognised as a
payable in other payables (see note 31).
Investment in Shankley Biogas Limited
On 27 September 2021, EQTEC announced that EQTEC's wholly owned
subsidiary, Southport WTV Limited ("Southport"), had signed a Share
Purchase Agreement ("SPA - Southport") with Rotunda Group Limited
("Rotunda") to acquire full ownership of the Southport Hybrid
Energy Park project ("Southport Project") from Rotunda through the
acquisition of Shankley Biogas Limited ("Shankley").
The key terms of the SPA-Southport were as follows:
-- Initial consideration of GBP382,000 (EUR444,161) from which
the existing exclusivity payment of GBP100,000 was deducted,
payable on the achievement of certain conditions precedent related
to development milestones of the Southport Project on or before a
date 12 months from the date of signing of the SPA-Southport;
-- One of the conditions precedent is that EQTEC is granted a
lease in relation to the Southport Project sufficient for the
development and operation of the Southport Project and on terms
generally acceptable to Southport and any funder (in their entire
discretion); and
-- The issue of a fixed dividend share in Southport to Rotunda,
which gives Rotunda the right to 20% of distributable profits in
Southport. This share carries no voting rights or entitlement to
dividends in EQTEC.
Contracts have been exchanged but completion as defined in
SPA-Southport had not occurred at the year-end, and as a result
Shankley Biogas Limited is not considered a subsidiary undertaking
of the Group at 31 December 2021.
In these financial statements the exclusivity payment of
EUR119,119 (GBP100,000) has been recognised as an investment in a
related undertaking and the balance of consideration payable of
EUR335,914 (GBP282,000) has classified as a commitment (see note
39).
22. OTHER FINANCIAL INVESTMENTS
2021 2020
Group: EUR EUR
Financial investments at
amortised cost
Bonds and Debentures 402,644 402,644
Less: Provision against
investment in Bonds (402,644) (402,644)
Investment in Shares 1,832 1,832
Other investments 15,418 15,418
Less: Provisions against
other investments (17,250) (17,250)
- -
Financial investments at
fair value through profit
or loss (FVTPL)
Investment in Metal NRG 506,976 -
plc
Total 506,976 -
Company
Financial investments at
fair value through profit
or loss (FVTPL)
Investment in Metal NRG 506,976 -
plc
Total 506,976 -
Financial assets at FVTPL include the equity investment in Metal
NRG plc which was financed through the exchange of shares in
the Company. The Group and the Company accounts for the investment
in Metal NRG plc at FVTPL and did not make the irrevocable election
to account for it at FVOCI. As at 31 December 2021, the fair
value of the Group's interest in Metal NRG plc, which is listed
on the London Stock Exchange, was EUR506,976 (2020: Not applicable)
based on the quoted market price available on the London Stock
Exchange, which is a Level 1 input in terms of IFRS 13.
Movement in other financial investments was as
follows: 2021 2020
EUR EUR
At beginning of financial year - -
Acquired via the exchange of shares in EQTEC 745,161 -
plc
Movement in fair value (250,378) -
Exchange differences 12,193 -
At end of financial year 506,976 -
23. DEFERRED TAXATION
A deferred tax asset has not been recognised at the consolidated
statement of financial position date in respect of trading tax
losses arising from the Irish and UK subsidiaries. Due to the
history of past losses, the Group has not recognised any deferred
tax asset in respect of tax losses to be carried forward which are
approximately EUR24.4 million at 31 December 2021 (2020: EUR21.5
million).
24. DEVELOPMENT ASSETS
2021 2020
EUR EUR
Group
Costs associated with project development
undertakings
3,455,496 503,653
Loan receivable from project development
undertakings 3,000,469 482,537
The Group invests capital in assisting in the development of
waste to value projects which can deploy its technology and
expertise and make a profit from the realisation of the development
costs at the financial close, when project financing is in place so
that the project undertaking can commence construction. Cost
comprises direct materials and overheads that have been incurred in
furthering the development of a project towards financial
close.
For the financial year ended 31 December 2021, EURNil (2020:
EURNil) of development assets was included in consolidated
statement of profit or loss as an expense and EUR5,498 (2020:
EURNil) was impaired resulting from write down of development
assets.
Included in loans receivable from project development
undertakings is an amount of EUR550,000, (2020: EUR200,000) which
is receivable, along with accrued interest, 18 months from the date
of drawdown. Interest is charged at 15% per annum. At 31 December
2021, the loan is valued at EUR613,678 (2020: EUR213,297).
The remaining loans receivables were issued with no interest and
no fixed repayment date.
2021 2020
EUR EUR
Company
Costs associated with project development
305,553 9,275
Loan receivable from project development
undertakings 613,678 243,598
Included in loans receivable from project development
undertakings is an amount of EUR550,000, (2020: EUR200,000) which
is receivable, along with accrued interest, 18 months from the date
of drawdown. Interest is charged at 15% per annum. At 31 December
2021, the loan is valued at EUR613,678 (2020: EUR213,297).
25. TRADE AND OTHER RECEIVABLES
2021 2020
EUR EUR
Group
Trade receivables gross 5,268,923 638,602
Allowance for credit losses (475,687) (475,687)
Trade receivables net 4,793,236 162,915
VAT receivable 903,069 172,405
Deferred consideration for the disposal
of Pluckanes Windfarm (see note 33) 133,034 120,424
Advances to related undertakings 60,000 60,000
Allowance for credit losses (60,000) (60,000)
Prepayments 133,344 133,403
Amounts receivable from associate companies 27,508 -
Deposit payment on land (See below) 309,708 -
Corporation tax 381 6,841
Payments on account to suppliers 355,267 120,798
Other receivables 221,200 177,745
6,876,747 894,531
The option payment represents a deposit paid with respect to a
conditional land purchase agreement relating to the land on which
the proposed up to 25 MWe Billingham waste gasification and power
plant at Haverton Hill, Billingham, UK, will be constructed.
All amounts are short-term. The net carrying value of trade
receivables is considered a reasonable approximation of fair
value.
The following table shows an analysis of trade receivables split
between past due and within terms accounts. Past due is when an
account exceeds the agreed terms of trade, which are typically 60
days.
2021 2020
EUR EUR
Within terms 4,649,704 10,579
Past due more than one month but less
than two months 2,876 149,925
Past due more than two months 616,343 478,098
5,268,923 638,602
Included in the Group's trade receivables balance are debtors
with carrying amount of EUR140,656 (2020: EUR2,411) which are past
due at year end and for which the Group has not provided.
The Group does not hold any collateral over these balances. No
interest is charged on overdue receivables. The quality of past due
not impaired trade receivables is considered good. The carrying
amount of trade receivables approximates to their fair values.
The Group's policy is to recognise an allowance for doubtful
debts of 100% against all receivables over 120 days because
historical experience has been that trade receivables that are past
due beyond 120 days are not recoverable. Allowances for doubtful
debts are recognised against trade receivables between 60 days and
120 days based on estimated irrecoverable amounts determined by
reference to past default experience of the counterparty and an
analysis of the counterparty's current financial position. The
review on these balances shows that all of the above amounts, with
the exception of EURNil (2020: EUR4,754) are considered
recoverable.
In determining the recoverability of a trade receivable, the
Group considers any changes in the credit quality of the trade
receivable from the date credit was initially granted up to the end
of the current reporting financial year. The concentration of the
credit risk is limited due to the customer base being large and
unrelated, and the fact that no one customer holds balances that
exceeds 10% of the gross assets of the Group. The maximum exposure
risk to trade and other receivables at the reporting date by
geographic region, ignoring provisions, is as follows:
2021 2020
EUR EUR
Ireland 72,919 30,000
Spain 4,007,695 608,602
Croatia 1,188,309 -
5,268,923 638,602
The aged analysis of other receivables is within terms.
The closing balance of the trade receivables loss allowance as
at 31 December 2021 reconciles with the trade receivables loss
allowance opening balance as follows:
EUR
Opening loss allowance as
at 1 January 2020 475,687
Loss allowance recognised -
during the financial year
Loss allowance as at 31 December
2020 475,687
Loss allowance recognised -
during the financial year
Loss allowance as at 31 December
2021 475,687
The closing balance of the advances to related undertakings loss
allowance as at 31 December 2021 reconciles with the advances to
related undertakings loss allowance opening balance as follows:
EUR
Opening loss allowance as at 1 January
2020 60,000
Loss allowance recognised during the -
financial year
Loss allowance as at 31 December 2020
556
Loss allowance recognised during the
gear
Loss allowance as at 31 December 2020 60,000
Loss allowance recognised during the -
financial year
Loss allowance as at 31 December 2021 60,000
There is no concentration of credit risk with respect to
receivables as disclosed in Note 5 under credit risk.
2021 2020
Company EUR EUR
Amounts due from subsidiary undertakings 14,091,925 2,567,624
Allowance for impairment of balances - -
14,091,925 2,567,624
Trade receivables 353,219 30,000
Allowance for credit losses (30,000) (30,000)
Advances to related undertakings 60,000 60,000
Allowance for credit losses (60,000) (60,000)
Prepayments 87,567 124,582
Receipts from share fundraise - -
Corporation Tax 96 96
VAT Receivable 2,281 8,429
Other receivables 2,760 2,760
14,507,848 2,703,491
The concentration of credit risk in the individual financial
statements of EQTEC plc relates to amounts due from subsidiary
undertakings. The directors have reviewed these balances in the
light of the impairment review carried out on the investments by
EQTEC plc in its subsidiaries.
The directors considered the future cash flows arising from
subsidiaries and are satisfied that the appropriate impairment has
been applied to these balances. All amounts are short-term. The net
carrying values of amounts due from subsidiary undertakings, trade
and loans receivables are considered a reasonable approximation of
their fair values.
The closing balance of the trade receivables loss allowance as
at 31 December 2021 reconciles with the trade receivables loss
allowance opening balance as follows:
EUR
Opening loss allowance as at 1 January
2020 30,000
Loss allowance recognised during the -
financial year
Loss allowance as at 31 December 2020
556
Loss allowance recognised during the
gear
Loss allowance as at 31 December 2020 30,000
Loss allowance recognised during the -
financial year
Loss allowance as at 31 December 2021 30,000
The closing balance of the advances to related undertakings loss
allowance as at 31 December 2021 reconciles with the advances to
related undertakings loss allowance opening balance as follows:
EUR
Opening loss allowance as at 1 January
2020 60,000
Loss allowance recognised during the -
financial year
Loss allowance as at 31 December 2020
556
Loss allowance recognised during the
gear
Loss allowance as at 31 December 2020 60,000
Loss allowance recognised during the -
financial year
Loss allowance as at 31 December 2021 60,000
26. CASH AND CASH EQUIVALENTS
For the purposes of the cash flow statement, cash and cash
equivalents include cash on hand and in banks and bank overdrafts.
Cash and cash equivalents at the end of the financial year as shown
in the cash flow statement can be reconciled to the related items
in the balance sheet as follows:
2021 2020
Group EUR EUR
Cash and bank balances 6,446,217 6,394,791
Bank overdrafts (Note 29) - (124,210)
Sub-total 6,446,217 6,270,581
Cash and cash equivalents
included in a disposal - -
group held for resale (Note
32)
6,446,217 6,270,581
Company
Cash and bank balances 4,845,633 6,111,864
Bank overdrafts (Note 29) - -
4,845,633 6,111,864
The carrying amount of the cash and cash equivalents is
considered a reasonable approximation of its fair value.
27. EQUITY
Share Capital
Allotted and Allotted
At 31 December Authorised called up Authorised and
2020 Number Number EUR called
up
EUR
Ordinary shares
of EUR0.001
each 12,561,091,094 6,977,439,598 12,561,091 6,977,439
Deferred ordinary
shares of EUR0.40
each 200,000,000 22,370,042 80,000,000 8,948,017
Deferred "B"
Ordinary Shares
of EUR0.099
each 75,140,494 75,140,494 7,438,909 7,438,909
Deferred convertible
"A" ordinary
shares of EUR0.01
each 10,000,000,000 99,117,952 100,000,000 991,180
200,000,000 24,355,545
Allotted and Allotted
At 31 December Authorised called up Authorised and
2021 Number Number EUR called
up
EUR
Ordinary shares
of EUR0.001
each 12,561,091,094 8,599,024,945 12,561,091 8,599,024
Deferred ordinary
shares of EUR0.40
each 200,000,000 22,370,042 80,000,000 8,948,017
Deferred "B"
Ordinary Shares
of EUR0.099
each 75,140,494 75,140,494 7,438,909 7,438,909
Deferred convertible
"A" ordinary
shares of EUR0.01
each 10,000,000,000 99,117,952 100,000,000 991,180
200,000,000 25,977,130
The holders of the ordinary shares are entitled to participate
in the profits or assets of the Company (by way of payment of any
dividends, on a winding up or otherwise) and are entitled to
receive notice, attend, speak and vote at general meetings of the
Company. Each ordinary share equates to one vote at meetings of the
Company.
The holders of the deferred convertible "A" ordinary shares are
entitled to participate pari passu with ordinary shareholders in
the profits or assets of the Company on a winding-up, up to an
amount equal to the par value paid in respect of such deferred
convertible "A" ordinary shares but are not entitled to participate
in the profits or assets of the Company (by way of payment of any
dividends or otherwise). The holders of the deferred convertible
"A" ordinary shares are not entitled to receive notice, attend,
speak and vote at general meetings of the Company.
The holders of the deferred ordinary shares and the deferred "B"
ordinary shares are not entitled to participate in the profits or
assets of the Company (by way of payment of any dividends, on a
winding up or otherwise) and are not entitled to receive notice,
attend, speak and vote at general meetings of the Company.
Share Premium
Proceeds received in excess of the nominal value of the shares
issued during the financial year have been included in share
premium, less registration and other regulatory fees. Costs of new
shares charged to equity amounted to EUR1,470,868 (2020:
EUR639,931).
Company Share Premium
The share premium included in the consolidated and company
statement of financial position is different by EUR18,934,080 due
to the reverse acquisition of the Group which occurred on 13
October 2008. The reverse acquisition resulted to a reverse
acquisition reserve which has been netted off against the share
premium in the consolidated statement of financial position.
Movements in the financial year to 31 December 2021
Amounts of shares 2021 2020
Ordinary Shares of EUR0.001 each issued
and fully paid
- Beginning of the financial year
- Issued on exercise of warrants
- Issued in lieu of borrowings and 6,977,439,598 3,939,376,266
settlement of payables 335,657,692 436,400,000
- Issued in exchange for financial 167,728,038 379,441,112
instruments 51,532,961 -
- Share issue placement 1,066,666,656 2,222,222,220
Total Ordinary shares of EUR0.001 each
authorised, issued and fully paid at
the end of the financial year 8,599,024,945 6,977,439,598
Share warrants and options
As at 31 December 2021 the Company had 554,355,338 share
warrants and options outstanding (2020: 866,968,027).
No of warrants/options Exercise price Final exercise
(pence) date
1,533,505 5.53 05/02/2022
38,450,000 10.0 15/07/2022
424,022,288 0.25 31/03/2023
67,304,542 0.65 30/06/2024
23,045,003 0.01 31/01/2032
554,355,338
Details of warrants granted
LTIP 2021 Options Placing warrants Employee Employee Advisor warrants
warrants options
Number Exercise Number Exercise Number Exercise Number Exercise Number Exercise
price price price price price
(Pence) (Pence) (Pence) (Pence) (Pence)
At 1
January
2021 - - 138,000,000 0.25 590,906,437 0.25 67,304,542 - 30,773,543 0.33
Issued
in year 23,045,003 0.01 - - - - - - - -
Cancelled
or expired
in year - - - - - - - - - -
Exercised
in year - - 138,000,000 0.25 166,884,149 - - - 30,773,543 0.33
At 31
December
2021 23,045,003 0.01 - - 424,022,288 0.25 67,304,542 0.65 - -
Exercisable
at 31
December
2021 - - - - 424,022,288 0.25 67,304,542 0.65 - -
Average
life
remaining
at 31 10.08
December years 1.25 2.58
2021 - years years
Advisor warrants Advisor warrants
Number Exercise Number Exercise
price (Pence) price (Pence)
At 1 January
2021 and 31 December
2021 1,533,505 5.53 38,450,000 10.0
Exercisable at
31 December 2021 1,533,505 5.53 38,450,000 10.0
Average life
remaining at
31 December 2021 0.08 years 0.54 years
Advisor warrants totalling 1,533,505 lapsed post year end
leaving a Nil balance.
The options granted during the year related to the adoption of
the EQTEC All Employee Long-term Incentive Plan (the "LTIP"). The
LTIP is a core part of the Company's new approach to business
planning, performance management and employee incentives and is
designed to drive individual and team performance in line with
Company performance, thereby creating value for shareholders while
minimising cash outlay. All Company Executive Directors and
employees are eligible to participate in the LTIP.
Any awards made under the LTIP will comprise zero-cost share
allocations ("Incentive Shares") and will be settled in equity. 60%
will vest providing the relevant individual is employed by the
Company as of the vesting date, subject to no notice of
termination, disciplinary proceedings or similar, and in the view
of the Board, fulfilling his/her responsibilities to the highest
possible standards. The remaining 40% of Incentive Shares will vest
provided the relevant individual has met the aforementioned
employment conditions and, in addition, a Company-wide performance
condition. The condition will be set annually by the Board against
one or more of the Company's priority financial targets. In respect
of these Company performance allocations, there will be a minimum
or 'threshold' achievement that must be obtained to qualify, with a
'straight-line' calculation of award up to a maximum level. Both
types of Incentive Shares will be allocated annually and, subject
to the above vesting conditions would vest over three years. The
2021 share allocation would vest in three equal instalments on 1
May 2022, 1 May 2023 and 1 May 2024, following announcement of the
Company's annual results. All vested awards are subject to a
lock-in period, whereby any new ordinary shares of EUR0.001 each
issued ("Ordinary Shares") cannot be sold for two years from
vesting for Directors and Heads of Function, or 12 months for all
other employees. Awards are further subject to certain malus and
clawback provisions, at the Board's discretion.
The Group recognised total expenses of EUR205,648 and
EUR1,819,658 related to equity-settled share-based payment
transactions in 2021 and 2020 respectively (see notes 10 and
11).
28. NON-CONTROLLING INTERESTS
2021 2020
EUR EUR
Balance at beginning of
financial year (2,223,986) (2,326,274)
Share of profit/(loss) for
the financial year 68 (5,082)
Release of non-controlling
interest - 15,978
Unrealised foreign exchange
(losses)/gains (160,271) 91,392
Balance at end of financial
year (2,384,189) (2,223,986)
29. BORROWINGS 2021 2020
Group EUR EUR
Current liabilities
At amortised cost
Bank overdrafts - 124,210
Secured loan facility
(SLF) - 896,641
- 1,020,851
Company 2021 2020
Current liabilities EUR EUR
At amortised cost
Secured loan
facility
(SLF) - 896,641
- 896,641
Borrowings at amortised cost
The secured loan facility (SLF) was secured through an
intercreditor deed by mortgage debentures, cross guarantees and
share pledges over the Group. The interest rate on the loan is
fixed at 10% (2020: 12.5%) and the loan was due to mature on 30
June 2021. On 4 January 2021, the SLF was repaid early using funds
from a separate facility (see below). Included in the repayment was
an early redemption fee of EUR466,929.
On 4 January 2021 the Company agreed an unsecured term loan
facility of EUR1.39 million (GBP1.25 million) (ULF) with Altair
Group Investment Limited, a substantial shareholder in the Company.
The ULF is for a term of 12 months and the principal and any
accrued interest are repayable in full on 31 December 2021 but the
Company can repay the ULF early without penalty. The ULF is
unsecured and has a coupon of 6% per annum, payable quarterly in
arrears. The ULF was used to pay all sums due under the SLF
releasing and discharging any secured assets and obligations under
the SLF.
On 1 March 2021, the Company repaid GBP285,000 of the ULF and
the balance of principal plus accrued interest was settled on 2
June 2021.
Reconciliation of liabilities arising from financing
activities
The table below details changes in the Group's liabilities
arising from financing activities, including both cash and non-cash
changes. Liabilities arising from financing activities are those
for which cash flows were, or future cash flows will be, classified
in the Group's consolidated statement of cash flows as cash flows
from financing activities. Except where noted, all liabilities
noted below are disclosed in Note 29.
Lease
Other Bank Bank Liabilities
CSLN SLF Loans Borrowings Overdraft (Note 30) Total
EUR EUR EUR EUR EUR EUR EUR
Balance at 1
January 2020 1,008,017 1,418,028 5,691 313,953 - 274,434 3,020,123
Financing Cash
Flows
Proceeds from
borrowings - - - 107,000 - - 107,000
Repayment of
borrowings - (852,567) - (420,953) - (89,828) (1,363,348)
Change in bank
overdraft - - - 124,210 - 124,210
Loan issue
costs (11,489) (19,455) - - - - (30,944)
Total from
financing
cash flows (11,489) (872,022) - (313,953) 124,210 (89,828) (1,163,082)
Non-cash
changes
Conversion into
equity (1,165,809) - - - - - (1,165,809)
Effect of
changes
in foreign
exchange
rates (72,470) (82,502) - - - - (154,972)
Amortisation
of loan issue
costs 50,022 89,921 - - - - 139,943
Reprofiling
fee levied 104,989 157,341 - - - - 262,330
Redemption fee
levied - 50,149 - - - - 50,149
Other changes 86,740 135,726 (5,691) - - 7,101 223,876
Total non-cash
changes (996,528) 350,635 (5,691) - - 7,101 (644,483)
Balance at 31
December 2020 - 896,641 - - 124,210 191,707 1,212,558
Reconciliation of liabilities arising from financing activities
- continued
Lease Total
Bank Liabilities
ULF SLF Overdraft (Note
30)
EUR EUR EUR EUR EUR
Balance at
1 January 2021 - 896,641 124,210 191,707 1,212,558
Financing Cash
Flows
Proceeds from
borrowings 1,391,174 - - - 1,391,174
Repayment of
borrowings (1,479,764) (1,386,752) - (165,208) (3,031,724)
Change in bank
overdraft - - (124,210) - (124,210)
Total from
financing cash
flows (88,590) (1,386,752) - (165,208) (1,764,760)
Non-cash changes
Capitalisation
of leases - - - 219,301 219,301
Effect of changes
in foreign
exchange rates 60,019 9,936 - 3,567 73,522
Amortisation
of loan issue
costs - 12,058 - - 12,058
Redemption
fee levied - 466,929 - - 466,929
Other
changes 28,571 1,188 - 8,341 38,100
Total non-cash
changes 88,590 490,111 - 231,209 809,910
Balance at
31 December
2021 - - - 257,708 257,708
Other changes include interest accruals and payments.
30. LEASES
Lease liabilities are presented in the statement of financial
position as follows:
2021 2020
Group EUR EUR
Current 200,853 85,242
Non-current 56,855 106,465
257,708 191,707
The Group has leases for its offices in London, England and in
Barcelona, Spain. With the exception of short-term leases and
leases of low-value underlying assets, each lease is reflected on
the statement of financial position as a right-of-use asset and a
lease liability. The Group classifies its right-of-use assets in a
consistent manner to its property, plant and equipment (see Note
17).
Each lease generally imposes a restriction that, unless there is
a contractual right for the Group to sublet the asset to another
party, the right-of-use asset can only be used by the Group. Leases
are either non-cancellable or may only be cancelled by incurring a
substantive termination fee. Some leases contain an option to
purchase the underlying leased asset outright at the end of the
lease, or to extend the lease for a further term. The Group is
prohibited from selling or pledging the underlying leased assets as
security. For leases over office buildings, the Group must keep
those properties in a good state of repair and return the premises
in their original condition at the end of the lease. Further, the
Group must insure items of property, plant and equipment and incur
maintenance fees on such items in accordance with the lease
contracts.
The table below describes the nature of the Group's leasing
activities by type of right-of-use asset recognized in the
statement of financial position:
Right-of-use No. of Range Average No. of No of No of No of
asset right-of-use of remaining remaining leases leases leases leases
assets term lease with with with with
leased term extension options variable termination
options to purchase payments options
linked
to an
index
Leasehold
Building 2 1.33 years 1.29 years 0 0 0 0
The lease liabilities are secured by the related underlying
asset. Further minimum lease payments at 31 December 2021 were as
follows:
Minimum lease payments due
Within 1-2 2-3 3-4 4-5 years After Total
1 year years years years 5 years
EUR EUR EUR EUR EUR EUR EUR
2021
Lease payments 205,838 57,177 - - - - 263,015
Finance charges (4,985) (322) - - - - (5,307)
Net Present
Values 200,853 56,855 - - - - 257,708
2020
Lease payments 89,828 89,828 18,714 - - - 198,370
Finance charges (4,586) (1,993) (84) - - - (6,663)
Net Present
Values 85,242 87,835 18,630 - - - 191,707
Lease payments not recognised as a liability
The Group has elected not to recognise a lease liability for
short-term leases (leases with an expected term of 12 months or
less) or for leases of low value assets. Payments made under such
leases are expensed on a straight-line basis. The expense related
to payments not included in the measurement of the lease liability
is as follows:
2021 2021
EUR EUR
Short term leases 29,053 37,406
Leases of low-value assets 12,566 14,594
41,619 52,000
At 31 December 2021, the Group was committed to short-term
leases and the total commitment at that date was EUR17,472
(2020: EUR53,287).
Total cash outflow for lease liabilities for the financial
year ended 31 December 2021 was EUR165,208 (2020: EUR89,828).
Additional information on the right-to-use assets by class
of assets is as follows:
Carrying Amount Depreciation Impairment
(Note 17) Expense
EUR EUR EUR
Leasehold Buildings 254,104 156,520 -
Total Right-of-use
assets 254,104 156,520 -
The right-of-use assets are included in the same line item as
where the corresponding underlying assets would be presented if
they were owned.
31. TRADE AND OTHER PAYABLES 2021 2020
Group EUR EUR
VAT payable 220,167 -
Trade payables 2, 526,017 146,091
Advances paid by customers 400,000 -
Other payables 2,986,084 2,243,257
Accruals 680,938 716,473
PAYE & social welfare 108,600 78,158
6,921,806 3,183,979
The carrying amount of trade and other payables approximates its
fair value. All trade and other payables fall due within one
year.
Included in other payables is an amount of EUR2,977,963
(GBP2,500,000) (2020:EUR2,237,006 (GBP2,010,000)) relating to
consideration payable under the share purchase contract to acquire
Logik WTE Limited (see Note 21).
Trade and other creditors are payable at various dates in
accordance with the suppliers' usual and customary credit terms.
Corporation tax and other taxes including social insurance are
repayable at various dates over the coming months in accordance
with the applicable statutory provisions.
2021 2020
Company EUR EUR
Trade payables 89,669 91,390
Other creditors 2,840 1,250
Amounts payable to subsidiary undertakings 2 3
PAYE & social welfare 16,604 12,022
Accruals 381,941 642,908
491,056 747,573
The carrying amount of trade and other payables approximates its
fair value. All trade and other payables fall due within one
year.
Trade and other creditors are payable at various dates in
accordance with the suppliers' usual and customary credit terms.
Corporation tax and other taxes including social insurance are
repayable at various dates over the coming months in accordance
with the applicable statutory provisions.
32. DISPOSAL GROUP CLASSIFIED AS HELD FOR RESALE AND DISCONTINUED
OPERATIONS
In 2017, the Group made the decision to sell its subsidiary,
Pluckanes Windfarm Limited, which is involved in the generation of
electricity through wind. The disposal is consistent with the
Group's long-term policy to focus its activities as a technology
solution company for waste gasification to energy projects.
Consequently, assets and liabilities allocable to Pluckanes
Windfarm Limited were classified as a disposal group. Revenues and
expenses, gains and losses relating to the discontinuation of this
subgroup have been eliminated from profit or loss from the Group's
continuing activities and are shown as a single line item on the
face of the consolidated statement of profit or loss.
On 24 August 2020, the Group announced that it had entered into
a sales purchase agreement to dispose of its shares in Pluckanes
Windfarm Limited on a debt free/cash free basis. Details of the
assets and liabilities disposed of, and the calculation of the
profit or loss on disposal, are disclosed in Note 33.
The combined results of the discontinued operations included in
the loss for the financial year are set out below.
Period ended
24 August
2020
Profit for the financial year from discontinued EUR
operations
Revenue (Note 8) 135,644
Cost of sales (663)
134,981
Administrative Expenses (91,233)
Operating Profit 43,748
Finance Costs (Note 11) (18,381)
Finance Income (Note 11) 3
Profit from discontinued operations before tax 25,370
Tax Expenses -
Profit for the financial period from discontinued
operations (attributable
to owners of the Company) 25,370
Profit after tax on disposal of subsidiary (Note 33) 45,714
Profit for the financial period from discontinued
operations 71,084
Cash flows generated by Pluckanes Windfarm Limited for the financial
periods under review are as follows:
Period ended
24 August
2020
Cash flows from discontinued operations EUR
Operating activities (47,741)
Investing activities (19,997)
Financing activities (63,196)
Net cash flows used in discontinued
operations (130,934)
The carrying amount of assets and liabilities in this disposal
group are summarised as follows:
2021 2020
Assets classified as held for resale: EUR EUR
Non-current assets:
Property, plant and equipment - -
Current assets:
Trade and other receivables - -
Cash and cash equivalents (Note 26) - -
Assets classified as held for resale - -
Liabilities classified as held for
resale:
Current liabilities:
Borrowings - -
Trade and other payables - -
Liabilities classified as held for - -
resale
33. DISPOSAL OF SUBSIDIARY
As referred to in Note 32 on 24 August 2020, the Group disposed
of its interest in Pluckanes Windfarm Limited.
The net assets of Pluckanes Windfarm Limited at the date of
disposal were as follows:
24 August
2020
EUR
Property, Plant & Equipment 969,035
Financial non-current assets
Loss allowance as at 31 December 2020
556
Loss allowance recognised during the
gear 20,000
Trade and other receivables 22,622
Trade and other payables (8,740)
Bank overdraft (5,132)
Bank borrowings (778,765)
Net assets disposed of 219,020
Selling expenses 65,261
Gain on disposal 45,714
Total consideration 329,995
Satisfied by:
Cash and cash equivalents 213,503
Fair value of deferred consideration 116,492
329,995
Net cash inflow arising on disposal
Consideration received in cash and cash
equivalents 213,503
Add: negative cash equivalents disposed
of 5,132
218,635
Per the sales purchase agreement, EUR170,000 is being deferred
and held in escrow subject to the following conditions:
(i) the Buyer obtaining a planning extension to Pluckanes
Windfarm Limited's existing planning permission on its property, in
order to extend the term of the wind turbine activity, within two
years of the date of the requisite planning application which must
be submitted by the Buyer within three months of completion of the
sale;
(ii) the Group procuring the transfer of the substation between the landlord and ESB Networks; and
(iii) the Group procuring a letter from the relevant local
authority confirming compliance with a certain customary condition
of the existing planning permission.
If all three conditions are satisfied on or before the first
anniversary of the date of planning application (as set out in
condition (i) above) then the total deferred consideration of
EUR170,000 shall become immediately due and payable to the Group.
The deferred consideration will reduce to:
(a) EUR159,000 if the planning extension is obtained between 12
and 18 months from the date of planning application; and
(b) EUR152,000 if the planning extension is obtained between 18
and 24 months from the date of planning application.
In the event that the conditions listed above are not obtained
within 24 months from the date of planning application, the entire
deferred consideration element will fall away.
The fair value of the deferred consideration was calculated as
EUR116,492 on the date of disposal. At 31 December 2021, the fair
value of the deferred consideration was valued at EUR133,034 (31
December 2020: EUR120,424) and is included in trade and other
receivables (See Note 25).
The impact of Pluckanes Windfarm Limited on the Group's results
in the current and prior years is disclosed in Note 32.
The gain on disposal was included in the profit for the year
from discontinued operations (see Note 32).
34. RELATED PARTY TRANSACTIONS
The Group's related parties include Altair Group Investment
Limited ("Altair"),who at 31 December 2021 held 19.00% (2020:
19.66%) of the shares in the Company. Other Group related parties
include the associate and joint venture companies and key
management.
Transactions with Altair
During the financial year ended 31 December 2021, Altair
advanced EUR1,391,174 (2020: EURNil) to the Group by way of
borrowings. During the financial year ended 31 December 2021, the
Group repaid borrowings of EUR1,479,764 (2020: EUR1,175,839 by way
of conversion into equity) by way of conversion into equity.
Interest payable to Altair for the financial year ended 31 December
2021 amounted to EUR28,571 (2020: EUR170,084); this includes a
reprofiling fee of EURNil (2020: EUR106,321) with respect to the
reprofiling of the debt.
Included in borrowings, net of amortisation costs, at 31
December 2021 is an amount of EURNil (2020: EURNil) due to Altair
from the Group.
Transactions with key management personnel
Key management of the Group are the members of EQTEC plc's board
of directors. Key management personnel remuneration includes the
following:
Name Date of Salary Fees Pension Other Termination Short Long 2021 2020
Directorship EUR'000s EUR'000s Contribution Benefits Payments Term term Total Total
appointment/ EUR'000s EUR'000s EUR000's Incentives Incentives EUR'000s EUR'000s
retirement EUR'000s EUR000's
Executive
Directors
D Palumbo 174 - 9 2 - 105 - 290 565
J Vander Appointed
Linden 01/12/2020 174 - 10 4 - 105 61 354 14
Appointed
N Babar 19/07/2021 70 - 4 1 - 42 25 142 -
Y Alemán 154 - - - - 90 - 244 383
Former
Executive
Directors
Retired
G Madden 15/07/2021 159 - - 14 241 - - 414 947
Non-Executive
Directors
I Pearson - 69 - - - - - 69 68
T Quigley - 42 - - - - - 42 69
Total
2021 731 111 23 21 241 342 86 1,555 -
Total
2020 409 486 - 24 - - 1,127 - 2,046
At 31 December 2021, directors' remuneration unpaid (including
past directors) amounted to EUR341,812 (31 December 2020:
EUR260,875).
Prior to becoming a director, Mr D Palumbo provided advisory
services to the Company. The cost of these services amounted to
EURNil (2020: EUR103,201) for the financial year ended 31 December
2021. In addition, a company controlled by Mr. Palumbo provided
office space to the Group in London. The cost of these services
amounted to EUR12,566 (2020: EUR21,843). At 31 December 2021, an
amount of EURNil is included in trade and other payable with
respect to payments due to this company (2020: EUR3,172).
Prior to becoming a director, Mr J Vander Linden provided
advisory services to the Company. The cost of these services
amounted to EURNil (2020: EUR144,148) for the financial year ended
31 December 2021. At 31 December 2021, an amount of EURNil is
included in trade and other payable with respect to payments due to
this company (2020: EUR63,883). This balance was settled through
the issue of new ordinary shares of EUR0.001 each in the capital of
the Company on 1 February 2021.
During the year ended 31 December 2021, the Group entered into a
royalty settlement arrangement, to the value of EUR2,492,059, with
Syngas Technology Engineering, S.L. (a company controlled by Dr.
Yoel Alemán, the Group's CTO and current Board Director). This
balance was settled through a cash payment of EUR1,000,000 with the
remainder through the issue of new ordinary shares of EUR0.001 each
in the capital of the Company on 3 June 2021.
During the year ended 31 December 2021 a director, Mr I Pearson.
provided consultancy services to the Group to the value of
EUR116,261 (2020: EURNil) for which he received 6,666,666 in
shares. Included in trade and other payables at 31 December 2021 is
an amount of EURNil (31 December 2020: EURNil) with respect to
payments due to these services.
Transactions with key management personnel - continued
During the year, a director, Mr. T Quigley, provided consultancy
services to the Group in the year ended 31 December 2021 amounting
to EUR11,543 (2020: EURNil). Included in trade and other payables
is an amount of EURNil (2020: EURNil) with respect to these
services.
During the year, the company settled certain debts owed to
directors and former directors by way of equity. In accordance with
IFRIC 19 Extinguishing Financial Liabilities with Equity
Instruments, the loss recognised on these transactions related to
directors and former directors was EUR1,104,374 (2020: loss of
EUR128,900).
Details of each director's interests in shares and equity
related instruments that were in office at the year-end are shown
in the Directors' Report.
Transactions with associate undertakings and joint ventures
The following transactions were made with associate undertakings
and joint ventures in the year ended 31 December 2021:
North Fork Synergy Synergy EQTEC Italia Eqtec Synergy Total
Community Belisce Karlovac MDC srl Projects
Power LLC d.o.o. d.o.o. Limited
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR
Loans
to associated
undertakings
and joint
ventures
At start
of year 1,150,619 - - - - - - - - - 1,150,619 -
Advanced
during
year 1,790,113 1,150,619 547,853 - 581,056 - 482,000 - 100,000 - 3,501,022 1,150,619
Loans
derecognised (1,150,619) - - - - - - - (1,150,619)
Interest
charged
in year 54,287 - 3,147 - 3,338 10,406 - - - 71,178 -
Exchange
differences 47,442 - 808 - 857 - - - - 49,107
At end
of year 1,891,842 1,150,619 551,808 - 585,251 492,406 - 100,000 - 3,621,307 1,150,619
Sales
of goods
and services
Technology
sales 2,158,118 1,980,000 1,237,500 - 1,540,000 - 1,000,000 - - - 5,935,618 1,980,000
Development
fees - - 599,607 - 549,647 - - - - - 1,149,254 -
2,158,118 1,980,000 1,837,107 - 2,089,647 - 1,000,000 - - - 7,084,872 1,980,000
Year-end
balances
Included
in trade
receivables 34,900 - 1,962,925 - 2,202,884 - 42,919 - - - 4,243,628 -
Included
in loans
to
development
companies - 30,201 - - - - - - - - - 30,201
Included
in other
receivables - - - - 12,452 - 100 - 14,956 - 27,508 -
34,900 30,201 1,962,925 - 2,215,336 - 43,019 - 14,956 - 4,271,136 30,201
Unless otherwise stated, none of the transactions incorporate
special terms and conditions and no guarantees were given or
received. Outstanding balances are usually settled in cash.
35. EVENTS AFTER THE BALANCE SHEET DATE
Variation to Land Purchase Agreement
On 15 February 2022, the Group announced an agreement to extend
the existing, conditional Land Purchase Agreement (the "LPA")
relating to the land on which the proposed, up to 25 MWe Billingham
waste gasification and power plant (the "Project") at Haverton
Hill, Billingham, UK, will be constructed (the "Project Site").
Pursuant to the variation, the Group agreed to make a payment of on
24 February 2022, with an additional payment of GBP500,000 to be
paid on or before 30 September 2022 to Scott Bros, the sellers.
These two payments will be deducted from the total purchase price
along with the previously paid deposit. The balance of GBP7,590,000
is payable at completion of the land purchase, which must occur on
or before 23 December 2022. In addition, the Group paid a further
fee of GBP250,000 as consideration for the Variation to Scott Bros
on 24 February 2022.
Loan Facility
On 29 March 2022, the Group announced that it had entered into a
loan agreement with Riverfort Global Opportunities PCC Limited and
YA II PN, Ltd (together, the "Lenders") for the provision of an
unsecured loan facility of up to GBP10 million. The Loan Facility
may be drawn down in multiple instalments with the Initial Advance
being received on 29 March 2022.
Each instalment of the Loan Facility will have a maturity date
of 12 months from the date of advance with repayments of principal
made on a monthly basis, as set out in a closing statement to be
agreed at the time of each advance. The Loan Facility will accrue a
fixed interest coupon equivalent to 7.5% of the Initial Advance and
of any further advance, payable on a quarterly basis.
Instalments of the Loan Facility subsequent to the Initial
Advance are not committed and would only be advanced to the Company
in the event that the Lenders and the Company agree in writing and
upon the satisfaction of certain conditions precedent. The Loan
Agreement has a commitment period of 18 months.
The Company and the Lenders may mutually agree that the Company
satisfies any payment of the amounts due under the Loan Agreement
by the issue of ordinary shares of EUR0.001 each in the capital of
the Company ("Ordinary Shares") at a reference price of the average
daily VWAP for each of the five consecutive trading days preceding
the drawdown date of each advance of the Facility (the "Reference
Price"). If such settlement is agreed by the parties, the value of
Ordinary Shares the Lenders will receive at the Reference Price
will be 115% of the amount of the Loan Facility being settled in
lieu of repayment of the debt.
The Company may elect to redeem the Loan Facility early by
repaying all outstanding principal and interest together with an
early repayment fee of 5% of the outstanding principal at the date
of repayment. If the Company elects to repay the Loan Facility
early, the Lenders may elect to subscribe up to 20% of the
outstanding amount in Ordinary Shares, at the Reference Price. In
addition, if the Company completes an equity placing whilst the
facility is in place, the Lenders may elect to convert up to 20% of
the outstanding amount of the Facility into Ordinary Shares in the
Company at the price at which such shares are issued pursuant to
the placing and multiplying the resulting number by 1.1.
The Company received net approximately GBP4,750,000 from the
Initial Advance following the deduction of a commitment fee of 2.5%
of the aggregate amount of the Loan Facility, being GBP10 million.
The Company will use the proceeds of the Loan Facility to fund
further growth and development activities in its key markets, and
for general working capital purposes.
Deeside RDF Project Update
On 1 April 2022, the Group announced that its wholly owned
subsidiary, Deeside WTV Limited ("Deeside WTV") had signed a
binding supplemental agreement (the "Supplemental Agreement") with
Logik Developments Limited ("Logik"). The Supplemental Agreement,
inter alia, sets out the terms on which Logik and Deeside WTV
(together, the "Parties") have agreed to vary the terms of the
share purchase agreement signed by the Parties on 7 December 2020,
as amended by the supplemental agreement announced on 6 December
2021 (the "Existing SPA").
The key terms of the Supplemental Agreement are as follows:
-- Deeside WTV will acquire 32% of the share capital of Logik
WTE Limited (the "Project SPV"), the entity which holds the land
and necessary planning permissions for the Deeside RDF project (the
"Project"), with the consideration to be satisfied by the
settlement of advances from the Group to Logik and the Project SPV
in an amount of c. GBP2.3 million;
-- Completion of Deeside WTV's acquisition of the interest in
the share capital in the Project SPV is subject to third party
consent and is expected to complete on or before 30 June 2022;
-- Parties are in discussions to procure a buyer for the Project
SPV at a minimum valuation of GBP15 million. Subject to the sale of
the Project SPV, EQTEC will invoice up to GBP2 million for its
project development services to the Project SPV (such fee to be
reduced on a pound for pound basis if the investment received is
less than GBP17 million), subject to certain conditions to be
finalised and agreed as part of ongoing discussions with potential
buyers; and
-- While the amendment of the Existing SPA to extend the
completion date to 30 June 2022 is immediately effective, the
Parties have agreed to act in good faith and to use all reasonable
endeavours to implement the additional undertakings and agreements
in the Supplemental Agreement as summarised in this announcement,
including to amend the terms of the Existing SPA and to finalise
other necessary documentation such as a shareholders' agreement for
the Project SPV.
No other adjusting or significant non-adjusting events have
occurred between the 31 December reporting date and the date of
authorisation.
36. NON-CASH TRANSACTIONS
During the financial year, the Group entered into the following
non-cash investing and financing activities which are not reflected
in the consolidated statement of cash flows:
2021 2020
EUR EUR
Issue of shares in settlement
of borrowings and other liabilities 3,452,741 1,915,693
Issue of shares in exchange for 745,161 -
financial assets
37. COMPANY PROFIT AND LOSS
As a consolidated group income statement is published, a
separate income statement for the parent company is omitted from
the Group's financial statements by virtue of section 304(2) of the
Companies Act, 2014. The Company's loss for the financial year
ended 31 December 2021 was EUR3,942,601 (2020: EUR3,270,895).
38. CONTINGENT LIABILITIES
On 13 July 2020, the Group announced that lawyers acting for
Aries Clean Energy LLC of Franklin, Tennessee, USA ("Aries") filed
a complaint in a Californian court on 9 July 2021 against the
Company and others, alleging patent infringement through the use of
the Group's advanced gasification technology in the North Fork
Community Power plant in California USA.
On 22 March 2021 the Company announced the Aries had withdrawn
its patent infringement complaint. The joint stipulation that the
action be voluntarily dismissed with prejudice was filed in the
United States District Court Eastern District of California on 19
March 2021 and operates as a final determination on the merits of
the case, forbidding Aries from filing another lawsuit on the same
grounds.
39. COMMITMENTS
As disclosed in Note 21, consideration of EUR335,914
(GBP282,000) will become payable on the achievement of certain
conditions precedent related to development milestones of the
Southport Project on or before a date 12 months from the date of
signing of the Share Purchase Agreement (i.e. 27 September 2022) to
acquire full ownership of the Southport Hybrid Energy Park project
through the acquisition of Shankley Biogas Limited
40. APPROVAL OF FINANCIAL STATEMENTS
These financial statements were approved by the Board of
Directors on 22 April 2022.
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END
FR BKBBKBBKDPQB
(END) Dow Jones Newswires
April 25, 2022 02:00 ET (06:00 GMT)
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